Stop limit order | Robinhood (2024)

FAQs

How does a stop limit order work? ›

The stop-limit order will be executed at a specified price, or better after a given stop price has been reached. Once the stop price is reached, the stop-limit order becomes a limit order to buy or sell at the limit price or better. This type of order is an available option with nearly every online broker.

Use a stop order when you are more concerned with getting out of the trade and are not as concerned about the price. A stop-limit order typically ensures that you get the price you set, but it doesn't guarantee that your trade will go through.

First, there is a stop-loss order that triggers the contract when a target price is met. Second, there is a limit price order that fills the contract only if the security price reaches that target.

A stop limit order lets you add an additional trigger to your trade, giving you more specificity over your order execution. When the options contract hits a stop price that you set, it triggers a limit order. Then, the limit order is executed at your limit price or better.

Stop orders are inactive, and hidden to the other market participants, until the trigger price is reached.

Remember that the key difference between a limit order and a stop order is that the limit order will only be filled at the specified limit price or better; whereas, once a stop order triggers at the specified price, it will be filled at the prevailing price in the market--which means that it could be executed at a ...

A limit order guarantees that an order is filled at or better than a specific price level. A limit order is not guaranteed to be filled, however. Limit orders control execution price but can result in missed opportunities in fast-moving market conditions.

Sell Stop Limit

A sell stop order tells the market maker/broker to sell the stocks if the price decreases to the stop point or below, but only if the trader earns a specific price per share. For example, if the current price per share is $60, the trader can set a stop price at $55 and a limit order at $53.

Stop-limit orders allow investors to set specific prices at which they want to buy or sell a security. Unlike stop-loss orders, which trigger a market order when a stock hits a set price, stop-limit orders convert into limit orders, providing investors more control over execution prices.

Limit order risks

Risk of no execution – Limit orders allow you to seek a specific price or better, but they do not guarantee that an execution will occur because the price may never reach your limit price.

In what way is a stop order like a limit order? ›

Understanding the Stop Order

Like limit orders, stop orders can be set up with a custom price in mind. However, unlike limit orders, they are not executed once the specific price is reached. On the contrary, stop orders are activated once the desired price has been met or exceeded.

Placing a one-cancels-the-other order (OCO), 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 if a limit is reached and stop your losses if the stop is triggered all with one order.

Stop orders will only trigger during the standard market session, 9:30 a.m. to 4 p.m. ET. Stop orders will not execute during extended-hours sessions, such as pre-market or after-hours sessions, or take effect when the stock is not trading (e.g., during stock halts or on weekends or market holidays).

The advantage of stop-loss orders is that they can help you stay on track and prevent your judgment from getting clouded with emotion. Finally, it's important to realize that stop-loss orders do not guarantee you'll make money in the stock market; you still have to make intelligent investment decisions.

A limit order is a direction given to a broker to buy or sell a security at a specific price or better. It is a way for traders to execute trades at desired prices without having to constantly monitor markets. It is also a way to hedge risk and ensure losses are minimized by capturing sale prices at certain levels.