What is a Stop Order?
A Stop Order does not create an order immediately. In fact, a Stop Order is your instruction to the exchange (a market order) that says something like: If the price of my asset falls below XX, sell the specified amount of my asset by executing a Market Order (a request to sell at the best available price in the current market).
If the price changes and reaches XX, your STOP Order will create a Market Order that will sell your asset in accordance with the market order rules.
Here is a formal definition:
This is true for both asset buy and sell orders, called Stop Sell Orders and Stop Buy Orders.
What is a Stop Sell Order?
A Stop Sell Order is an order to sell an asset if its market price falls to a specified level (Stop Price). Traders use this kind of order when they expect the asset price to grow but hedge their assets from a possible price decline. A Stop Sell Order is entered at a stop price below the current market price.
What is a Stop Buy Order?
A Stop Buy Order is an order to buy an asset if its market price increases to a specified level (Stop Price). Traders use this kind of order when they expect the asset price to fall but hedge their assets from a possible price increase. A Stop Buy Order is entered at a stop price above the current market price.