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Where can O find a plain English explanation of the difference between Stop, Limit, and Stop Limit orders?
voted interesting: williamwaco
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The Securities and Exchange Commission (SEC) has great explanations.
Basically, if you want to automatically buy or sell a stock at $20 that is currently at $19, you put in a stop order with your broker. Once the stock hits $20, it will automatically buy or sell shares for you.
A limit order is similar. If a stock is at $15, and you think it's going way up, you can put in a limit order at $20. That's basically saying that you are willing to buy it at the lowest price possible, but no higher than $20.
A stop limit order combines the two. Let's say you own a stock that is $50, and you're thinking it's going to drop a lot. You can put in a stop limit order which will trigger at $20 and sell for no less than $10. That means that if the stock goes down to below $20, your broker will try to sell the stock. But if the only price he can get for it is less than $10 (your limit), he won't sell it.
http://www.sec.gov/answers/stopord.htm
http://www.sec.gov/answers/limit.htm
http://www.sec.gov/answers/stoplim.htm
Basically, if you want to automatically buy or sell a stock at $20 that is currently at $19, you put in a stop order with your broker. Once the stock hits $20, it will automatically buy or sell shares for you.
A limit order is similar. If a stock is at $15, and you think it's going way up, you can put in a limit order at $20. That's basically saying that you are willing to buy it at the lowest price possible, but no higher than $20.
A stop limit order combines the two. Let's say you own a stock that is $50, and you're thinking it's going to drop a lot. You can put in a stop limit order which will trigger at $20 and sell for no less than $10. That means that if the stock goes down to below $20, your broker will try to sell the stock. But if the only price he can get for it is less than $10 (your limit), he won't sell it.
http://www.sec.gov/answers/stopord.htm
http://www.sec.gov/answers/limit.htm
http://www.sec.gov/answers/stoplim.htm
A stop order is an order to buy or sell a stock once the price of the stock reaches a specified price.
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.
A stop-limit order is an order to buy or sell a stock that combines the features of a stop order and a limit order. Once the stop price is reached, the stop-limit order becomes a limit order to buy or to sell at a specified price.
The sites listed in my sources give in depth explanations and examples of each.
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.
A stop-limit order is an order to buy or sell a stock that combines the features of a stop order and a limit order. Once the stop price is reached, the stop-limit order becomes a limit order to buy or to sell at a specified price.
The sites listed in my sources give in depth explanations and examples of each.
source(s):
http://www.sec.gov/answers/stopord.htm
http://www.sec.gov/answers/limit.htm
http://www.sec.gov/answers/stoplim.htm
http://www.sec.gov/answers/stopord.htm
http://www.sec.gov/answers/limit.htm
http://www.sec.gov/answers/stoplim.htm
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