Stop Limit Order

A stop limit order combines the characteristics of a stop order and a limit order. When the stock reaches the stop price that was set, a limit order is triggered. The limit order is then executed at your limit price or better. Investors typically use stop limit orders to try to limit a loss or protect a profit, in cases where the stock moves in the wrong direction.

Keep in mind! Short-term market fluctuations can prevent your order from being filled, or cause the order to trigger at an unfavorable price. For example, if the market jumps between the stop price and the limit price, the stop price will be triggered but the limit order will not be executed.

Also, once your stop limit order becomes a limit order, there must be a buyer and a seller on both sides of the order for the limit order to be executed. In case there is not enough stock, available in the market at your limit price, it may take several trades to fill the entire order, or the order may not be completed at all.

Buy Stop Limit Order

With a buy limit stop order, you can set a stop price above the current price of the stock. If the stock rises to the stop price, a buy limit order is triggered. Shares will then only be purchased at your limit price or lower.

Example:

HAPIS is currently trading at $10 per share. You want to wait to buy HAPIS because you think its price will go down. You also think that if HAPIS reaches $15, it may keep going up. To help minimize your potential costs, you set a stop price at $15. Also, you don't want to pay more than $14.50 for HAPIS, so you set a price limit at $14.50.

  • If HAPIS rises to $15 or more, your buy limit stop order will trigger a buy limit order. In that limit buy order, HAPIS will be bought if the shares are available at $14.50 or less.

  • If HAPIS stays above $15, the buy limit order will not be triggered and no shares will be bought.

(This example is shown for illustrative purposes only. In general, understanding order types can help you manage risk and execution speed. However, you can never completely eliminate market and investment risks, it’s usually better to choose an order type based on your investment goals and objectives.)

Sell Stop Limit Order

With a sell limit stop order you can set a stop price below the current share price. If the stock falls to the stop price, a sell limit order is triggered. Shares will only be sold at your limit price or higher.

Example:

HAPIS is currently trading at $10 per share. You want to wait to sell HAPIS because you think its price will go up. To protect your position in case HAPIS reverses and starts to fall, you place a stop price of $7. Also, you don't want to receive less than $7.05 for each share, so you set a limit price of $7.05.

  • If HAPIS falls to $7 or less, your stop limit sell order becomes a limit sell order. So HAPIS will be sold if shares are available at $7.05 or more.

  • If HAPIS remains below $7, the sell limit order will not be triggered and you will keep your shares.

(This example is shown for illustrative purposes only. In general, understanding order types can help you manage risk and execution speed. However, you can never completely eliminate market and investment risks, it’s usually better to choose an order type based on your investment goals and objectives.)

Still have questions about stop limit orders? Tell us about them at contacto@imhapi.app, we are here to help you!