Buy Stop Order

As the name implies the trader will pace the order to buy a particular stock at a particular price with the broker for Buy stop order. When this order is given it means that the broker will not buy the stock unless and otherwise the current price reaches the one quoted by the trader. The trader will usually quote a higher price than the prevailing market price. In case the price does not reach the set price then the investor does not do anything at all. This is mainly used by the trader in order to get the advantage of the increasing momentum of a stock. When the price touches the set price the order becomes a simple market order and transaction is completed on the trading day itself. The trader before placing such order would have done his homework. He would do a detailed research about the past and current performance of the particular stock. Along with this he will also consider the various market indicators and everything goes in favour of the stock and there is trend already set then he might go for this order. 

Though the risk element is little as only if the price reaches a high level set by the trader the transaction is set to happen. But on problem is if the stock reaches the high set price and then immediately drops down due to market volatility then the trader stands to lose money if he had purchased the stock. 

Buy Stop Limit Order

This is a type of order that will enable the trader to limit his risk for a given price range. Though there is an increasing trend in price of stock, market can turn any side at any time. Then in order to just take advantage of the momentum only to the limit of his risk bearing capacity he may issue a buy stop order along with the limit of order. The trader will fix a price range within which the stock could be purchased. This will help him avoid the risk if the broker happens to purchase the stock at extremely high price. This will decrease the risk element to a greater extent especially during high market volatility periods. Rather than giving a single price the trader will fix a price range. 

Sell Limit Order

This is a very simple order and easy to understand. The trader will fix a price for the stocks that the is holding. While placing the sell limit order any trader would want to sell at the maximum price. With this intention he would, after considering several parameters, fix a price that could get him more profits. This price is much above the current market price and only if the price reaches the one that is set by the trader will the broker sell off the stock. This way the trader can be assured of a fixed price return for his stocks.