Quick Definition

A stop-limit order is a type of stock trading order that combines the features of a stop order and a limit order. It triggers a limit order to buy or sell a stock once the stock reaches a specified stop price.

Examples

• 1An investor places a stop-limit order to buy 100 shares of XYZ Corp at a stop price of $50 and a limit price of $52. If XYZ's price reaches $50, the order becomes a limit order to buy at $52 or less.
• 2A trader sets a stop-limit order to sell 200 shares of ABC Inc at a stop price of $30 and a limit price of $28. When ABC's price falls to $30, the order becomes a limit order to sell at $28 or more.
• 3An investor uses a stop-limit order to manage risk by setting a stop price at 10% below the purchase price and a limit price slightly lower, ensuring they sell before incurring significant losses.
• 4A day trader uses stop-limit orders to capitalize on expected price jumps or drops by setting strategic stop and limit prices based on technical analysis.

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