Stop Limit Order

Stop Limit order is an attribute attached to a buy or sell order, so that the order gets executed as a limit order, only after the price has reached a specific trigger price.

After you create your 'Trading Action Plan', based on your own technical or fundamental research, next step you are going to take is, placing your order with your broker. Before you can start buying and selling stocks, you must know the different types of orders. You must be aware as to which order is appropriate and its implications.

What is a Stop Limit Order?

Order at stop limit is a conditional request made to the broker (or the system) to execute the transactions with the immediate best available price, once the price crosses a predetermined trigger price but with in a predetermined limit price.

When you are having a long position, a sell stop order is placed. Here a trigger price is specified below the purchased price, which when touched, a limit sell order is released to the system to square off the position.

Similarly, When you are having a short position, a buy stop order is placed. Here a trigger price is specified above the sold price, which when touched, a limit buy order is released to the system to square off the position.

When to use a Stop Limit Order?

Stop Limit Order is my favorite stock trading order. I enter the trade with this; exit the trade with this and manage the trade with this. This order helps me to enter the trade beyond the support and resistance.

When I want to buy a share, I place the trigger price, a tick above the resistance and set the limit price a few ticks above my trigger price.

Similarly, when I want to sell a share, I place the trigger price, a tick below the support and set the limit price a few ticks below my trigger price.

The moment I enter a trade I place a stop loss limit order as an initial stop loss order. Later I move it as trailing stop loss to protect my profits.

Trailing stop loss will be a little liberal on the way towards target. But near the target I tighten them to protect maximum profit. I also place a limit order at the target price along with the trailing stop loss order. When one order gets executed, the other order gets cancelled.

These Stop Limit Orders are best used, to buy a stock above the resistance or to sell a stock below the support, when they are breached, especially when you are buying an illiquid stock. 

Compare Stop Limit Order with other type of orders:

    • All or None Order
    • It is a conditional request made to the broker (or the system) to buy or sell a required number of shares at particular price, only if full quantity of shares are available.
    • GTC Order
    • It is a conditional request made to the broker (or the system) to keep the order in system until it gets executed or canceled.
    • GTD Order
    • It is a conditional request made to the broker (or the system) to keep the order in system until it gets executed or till a predetermined date.
    • IOC Order
    • Immediate or Cancel is a conditional request made to the broker (or the system) to execute the transactions immediately or to cancel it.
    • Limit Order
    • Limit Trading Order is a conditional request made to the broker (or the system) to buy or sell a stock at a particular price or at a better price.
    • Market Order
    • Order to buy or sell at market is a conditional request made to the broker (or the system) to execute the transactions with the immediate best available price.
    • Stop Loss Order
    • Order at stop is a conditional request made to the broker (or the system) to execute the transactions with the immediate best available price, once the price crosses a predetermined trigger price.
    • Minimum Fill Order
    • This is a conditional request made to the broker (or the system) to execute the transactions only when a minimum number of shares are available.
    • One Cancels Other Order
    • This is a conditional request made to the broker (or the system) to execute one of the two orders, which ever meets the required parameter first, and cancel the other.
    • Market on Close Order
    • This is a conditional request made to the broker (or the system) to buy or sell a stock at the closing price.
    • Limit on Close Order
    • This is a conditional request made to the broker (or the system) to buy or sell a stock at the closing price but with in a limit price.
    • Market on Open Order
    • This is a conditional request made to the broker (or the system) to buy or sell a stock at what ever the market opening price.
    • Limit on Open Order
    • This is a conditional request made to the broker (or the system) to buy or sell a stock at what ever the market opening price but with in a predetermined limit price.
    • Market If Touched Order
    • This is a conditional request made to the broker (or the system) to buy or sell a stock at what ever the market price only after the stock trades at particular predetermined price.
    • Iceberg Order
    • This is a conditional request made to the broker (or the system) to buy or sell a large required quantity of stock, but in smaller predetermined quantity.
    • Fill or Kill Order
    • This is a conditional request made to the broker (or the system) to execute the transactions only if the full quantity of shares are available, or else to cancel the order.





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