Stop-Limit Order
A stop-limit triggers a limit order once price reaches the stop level, capping the fill price but risking no fill at all.
A stop-limit triggers a limit order once price hits the stop level. It caps your worst fill but can leave you unfilled if price gaps straight through.
A stop-limit order combines a stop trigger with a limit price: when the market reaches the stop level, a limit order is placed at the specified price. It gives control over the worst fill price, but if price blows straight through your limit, the order may never fill and you keep the position. Use it where protection matters more than execution certainty.
How It Works
- Two prices: the stop (trigger) and the limit (worst accepted fill)
- If price gaps past the limit, the order does not fill
- Common on entry orders and protective stops in thin markets
Trading Tips
Set the limit close enough to the stop to fill in normal volatility, wide enough to survive a spike
Prefer a plain stop-loss for exits you must get out of
Stop-Limit Order Example
Say you hold a stock at $100 and set a stop-limit with trigger $95, limit $94. Price gaps to $90 overnight on bad earnings. The trigger fires, the $94 limit finds no buyers, and you still hold the full loser Monday morning. Protection with a hole in it.
How Traders Use Stop-Limit Order
Use stop-limits only in liquid markets during liquid hours, with the limit close enough to realistically fill. For true disaster protection, plain stops fill worse but fill always. Know which guarantee you bought.
Related Terms
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