A stop order is a type of trade order that triggers a market order once a specified price level, known as the stop price, is reached. This mechanism is often used to limit losses or protect profits on an investment.For example, if you own a cryptocurrency currently priced at $50 and want to limit your losses, you might set a stop order at $45. If the price drops to $45, the stop order will convert into a market order, selling the asset at the best available price.There are two main types: a sell stop order, used to sell when the price drops, and a buy stop order, which is executed when the price rises to a certain level. Traders often use these orders to manage risk and execute trades automatically, ensuring that they can react to market changes without needing to monitor prices constantly.Stop orders can be an effective tool for managing investments, but it’s important to understand that prices can be volatile, and market orders after a stop can execute at a price different from the stop price.