i know what a stop order and a limit order are

but i don't quite get what a stop-limit order is? and how it can be useful?

here's my understanding

stop - a stop order becomes a market order when the price hits the stop price

limit - to specify the price when buy or sell

and limit usually involves a higher service charge

but why a stop-limit is useful and i already place a limit on the price? why do i need a stop price as well?

 

A stop limit is a limit order which gets placed when the stock price hits a target price. A stop limit order may not get filled, just like a limit order might not.

XYZ trades at $100. You have a GTC stop limit sell order for $90. The stock falls to $90 and you order is placed. If the decline is gradual the order will probably get filled.

XYZ trades at $100. You have a GTC stop limit sell order for $90. They blow earnings after hours and XYZ opens at $80. Your order is placed to sell at $90. It never gets filled while the stock continues down from $80...

In the second scenario had your order been a market stop the order would have been placed and filled at the market price of $80 rather than remain unfilled at $90.

A stop order is misunderstood by most new investors. It is nothing but an order which is held back until a trigger occurs. In the case of a stop that trigger is a particular price level, in the case of a trailing stop it is a change in price from where the order was placed, either % or $ amount.

All you are doing when choosing a stop or a stop limit is choosing what type of order you are placing. That will depend on what you are looking to accomplish with the order.