Stop limit order | Robinhood (2024)

FAQs

What is a stop limit order? ›

Stop-limit orders enable traders to have precise control over when the order should be filled, but they are not guaranteed to be executed. The stop price dictates the price whether the order is triggered, then the limit price dictates the price at which the order is filled.

Stop-Limit Order Example

The investor enters a stop-limit order with a stop price of $60 (20% of $75), and decides to specify a stop-limit price of $58.50. If shares of XYZ decline to the stop price of $60, the 100 shares of XYZ will be sold as long as a minimum price of $58.50 can be obtained.

How Are Limit Orders Different From Stop Orders? A limit order sets a maximum price that you're willing to pay or a minimum price that you're willing to accept on a sale, whereas a stop order is triggered when an asset reaches a certain price and filled at the next available price.

Placing a one-cancels-the-other order, or what is also commonly referred to as a bracket order, allows you to have both a limit order and a stop order open at the same time. This allows you to lock in your potential profits and limit your losses all with one order.

Limit orders guarantee a trade at a particular price. Stop orders can be used to limit losses. They can also be used to guarantee profits, by ensuring that a stock is sold before it falls below purchasing price. Stop-limit orders allow the investor to control the price at which an order is executed.

Stop-limit orders are a type of stop-loss, but at the stop price, the order becomes a limit order—only executing at the limit price or better.

A stop order is an order to buy or sell a stock once the price of the stock reaches a specified price, known as the stop price. When the specified price is reached, your stop order becomes a market order. The advantage of a stop order is you don't have to monitor how a stock is performing on a daily basis.

Keep in mind, short-term market fluctuations may prevent your order from being executed, 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 will be triggered, but the limit order will not be executed.

A limit order is an order to buy or sell a security at a specific price. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher.

Why use a limit order? ›

The biggest advantage of the limit order is that you get to name your price, and if the stock reaches that price, the order will probably be filled. Sometimes the broker will even fill your order at a better price.

The stop price is a price that is above the market price of the stock, whereas the limit price is the highest price that a trader is willing to pay per share. For example, if John intends to buy ABC Limited stocks that are valued at $50 and are expected to go up today, he can put a stop price at $55.

Example: An investor wants to purchase shares of ABC stock for no more than $10. The investor could submit a limit order for this amount and this order will only execute if the price of ABC stock is $10 or lower.

A stop-limit order to sell at 20.30 with a limit of 20.10 means that as soon as there is a bid at20.30, the contract should be sold providing this can be done at 20.10 or a higher price.

A Sell Stop Order is an instruction to sell when the market price is lower than the current market price. A Sell Limit Order is an instruction to sell at a Price that's higher, not lower than the current market price. In a Sell Stop Limit Order the two are combined.