An order that becomes a limit order when triggered is referred to as a?

A stop limit order is a type of order that is designed to limit an investor's loss or protect a profit on a security. It becomes a limit order when the security reaches a specified stop price.

When the stop price is reached, the stop limit order is activated, which means it transitions into a limit order at a specified limit price. This allows investors to have control over the price at which they buy or sell, providing both a stop loss mechanism and an order that activates at a defined price level.

For example, if an investor places a stop limit order for a stock with a stop price of $50 and a limit price of $48, when the stock hits $50, the order is triggered and becomes a limit order to sell at $48 or better. This helps manage risk by setting clear parameters for selling a security in a fluctuating market.

Understanding the mechanics of stop limit orders is essential for investors who wish to actively manage their trades based on price movements while maintaining control over their entry or exit points.