A stop order is a type of trading order used in financial markets to buy or sell a security once it reaches a specified price, known as the stop price. When the market price hits this level, the stop order becomes a market order, executing at the next available price. This helps traders limit losses or protect profits. There are two main types of stop orders: a stop-loss order, which is designed to sell a security to prevent further losses, and a stop-limit order, which sets a limit on the price at which the order can be executed. Both are essential tools for managing risk in trading.