Stop orders are primarily utilized by traders to limit losses or protect profits in volatile trading environments. When the specified price, known as the stop price, is reached, the stop order becomes a market order, which means it will execute at the current market price. There are two main types of stop orders: stop-loss orders and stop-limit orders. A stop-loss order ensures a position is sold once the stop price is hit, while a stop-limit order will not sell the asset unless the stop price is reached followed by the limit price being met. Traders can strategically set stop orders to manage risk and control entry or exit points based on predefined criteria.