Question

What does a stop order to sell at $2 mean? When might it be used? What does a limit order to sell at $2 mean?

Answer 1

A stop order, also referred to as a stop-loss order, is an order to buy or sell a stock once the price of the stock reaches a specified price, known as the stop price. When the stop price is reached, a stop order becomes a market order. A buy stop order is entered at a stop price above the current market price

In the question, A stop order to sell at $2 is an order to sell at the best available price once a price of $2 or less is reached.

It could be used to limit the losses from an existing long position.

A limit order is an order to buy or sell a stock at a specific price or better. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher. A limit order is not guaranteed to execute.

In the question, A limit order to sell at $2 is an order to sell at a price of $2 or more. It could be used to instruct a broker that a short position should be taken, providing it can be done at a price more favorable than $2.