A stop limit order is an order to buy or sell a security when its price reaches a specified limit. It combines the features of a stop order, which is an order to buy or sell once the price of a security reaches a specified point, and a limit order, which is an order to buy or sell at a specified price or better.
Stop Limit is a type of order that combines the features of a stop order and a limit order. It is used to limit losses or protect profits on a security.
A stop limit order is an order to buy or sell a security once the price of the security reaches a specified price, known as the stop price. Once the stop price is reached, a limit order is placed to buy or sell the security at a specified price, known as the limit price. The limit price is the maximum or minimum price that the trader is willing to pay or accept for the security.
Stop limit orders are used to limit losses or protect profits on a security. For example, if a trader owns a stock and wants to limit their losses if the stock price drops, they can place a stop limit order. The stop price is set at the price at which the trader is willing to sell the stock. If the stock price drops to the stop price, the limit order is triggered and the stock is sold at the limit price.
Stop limit orders can also be used to protect profits. For example, if a trader owns a stock and wants to protect their profits if the stock price rises, they can place a stop limit order. The stop price is set at the price at which the trader is willing to sell the stock. If the stock price rises to the stop price, the limit order is triggered and the stock is sold at the limit price.
Stop limit orders are a useful tool for traders who want to limit their losses or protect their profits on a security. They can be used to set a maximum or minimum price at which a security can be bought or sold. However, it is important to remember that stop limit orders do not guarantee that the order will be filled at the limit price. If the stock price moves quickly, the order may not be filled at the limit price.