A stop limit order is an order to buy or sell a security 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.

A stop limit order can be used to limit losses or take profits.

When to Use

Stop limit orders are typically used by investors who want to control their risk or set a profit Target.

For example, let’s say you own shares of ABC stock that you bought for $10 per share. ABC stock is now trading at $12 per share and you want to take profits. You could place a stop limit order with a stop price at $11.50 and a limit price of $12.

50. If ABC stock hits your stop price of $11.50, your order will become a limit order to sell at $12.50.

Stop limit orders can also be used to minimize losses. For example, let’s say you own shares of XYZ stock that you bought for $5 per share. XYZ stock is now trading at $4 per share and you want to protect yourself from further losses. You could place a stop limit order with a stop price of $3.75 and a limit price of $4.

25. If XYZ stock hits your stop price of $3.75, your order will become a limit order to sell at $4.25.

It’s important to note that stop limit orders are not guaranteed to execute at the desired price level. This is because once the stop price is reached, the order becomes a market order which will fill at the best available price, which may be higher or lower than the desired limit price.

Because of this, investors should use caution when placing stop limit orders in fast moving markets as it’s possible that the order may not fill at the desired level, or may not fill at all.

How to Place Stop Limit Orders

most brokerages will have an online platform where investors can enter their trade orders . For example, Fidelity Investments has an online trading platform where investors can place their trades .

Other brokerages such as Charles Schwab and TD Ameritrade also have online platforms where trades can be placed . When placing a stop limit order, investors will typically need to enter the following information:.

Security – this is the ticker symbol of the security you want to trade
Quantity – this is the number of shares you want to buy or sell
Stop Price – this is the price at which your order will become a market order
Limit Price – this is the maximum (or minimum) price you’re willing to accept for your trade
Order Type – this is where you would select “stop-limit” from the drop-down menu
Time in Force – this indicates how long yourorder will remain active before it expires . The options here will vary by brokerage but typically include “good till canceled” (GTC), “day” (D), “immediate or cancel” (IOC), “fill or kill” (FOK), and “auction-only market” (AOM) .

After entering all of the relevant information, some brokerages will provide an estimated cost for the trade which includes commissions and fees . It’s important to review these costs before placing your trade as they can impact your overall return on investment .

Once you’re ready to place your trade , simply click on the “buy” or “sell” button which will send yourorder through to market . Yourorder will then remain active until it’s either filled at your specified prices , canceled by you , or expires due to time in force . .

Stop Limit Orders vs Limit Orders

It’s important to note that stop limit orders are different from regularlimit orders . A regularlimit order simply places anorderto buy or sell sharesat a specifiedlimit priceor better . For example , ifyou wantedto buy sharesof XYZ stockfor no morethan$5 per share ,you wouldplacea regularlimit buyorderwitha$5limitprice .

Yourorderwould thenfill atthe bestavailablepriceat or below$5per share . Oncethe orderis filled ,you wouldownsharesof XYZstockatwhatever pricethey werefilledat ,whichcould be$5per shareor less dependingonmarketconditions atthe timeof execution .

In contrast ,a stoplimitordercan onlybe placedaftera securityhasalreadyreachedthestop pricethat wasspecifiedwhen setting upthetrade . In ourprevious example ,this would meanthatXYZstockwouldneedto tradedat$5pershareor higherbeforeyourstoplimitexecutesand becomesa regularlimit orderto buy sharesat$5pershareor better( whichcould stillbe filledbelow$5pershareif themarketis moving quickly ). Keep in mindthat astoplimitis notguaranteedtoexecuteat themarket pricethattriggered it-onceyourstop pricisfilled ,theorderthenbecomes alimit orderto buysharesat aspecifiedlimitpriceor betterandmay fillbelowthemarket pricethattriggeredthe originalstopif marketconditionshavechangedsignificantlybythe timeof execution

Conclusion: How Do You Do A Stop Limit Binance?

In summary, a stop limit binance is an advanced type of trade that gives investors more control over their entries and exits compared to traditional market orders. To place a stop limit binance, investors need to enter four key pieces of information: the security ticker symbol, quantity of shares, stop price, and limit price.