Can someone explain to me the difference between stop and limit orders? I've dabbled in stocks for a number of years but have never been able to figure out the difference. When I read the definitions, they seem to be the same thing to me.
Stock trading question
- Thread starter jejton
- Start date
- Location
- Bergen County, NJ
For a stop order when the market hits that trading point it becomes a market order.
Let's say the market is moving at such a fast pace that you want to buy at 5, but it trades through to 6. As soon as it trades 5 wherever the market is at that point you will get filled.
A limit order you place a point where you want to buy or sell. The most you'd be willing to pay is 5 and the least you'd be willing to sell is 10 let's say. It won't be filled in between and at least the price you specified or better.
Let's say the market is moving at such a fast pace that you want to buy at 5, but it trades through to 6. As soon as it trades 5 wherever the market is at that point you will get filled.
A limit order you place a point where you want to buy or sell. The most you'd be willing to pay is 5 and the least you'd be willing to sell is 10 let's say. It won't be filled in between and at least the price you specified or better.
- Location
- Bergen County, NJ
They can both be filled at different prices.
For example
Stop Order:
Your working a 5Bid Stop:
market is 3 bid at 6, 4 bid at 7, touches 5 bid. As soon as it becomes 5 bid it becomes a market order if it touches 5 bid but then jumps up to 7 bid at 9 your filled at 9.
It can also hit 5 bid and sell right back off to 2 bid at 4, in which case you will be filled at 4.
Limit order if you want to pay 5 dollars you'll get filled at 5 dollar or lower and if you want to sell 10dollars then you'll get filled at 10 or better.
I hope i'm not confusing you. lol
For example
Stop Order:
Your working a 5Bid Stop:
market is 3 bid at 6, 4 bid at 7, touches 5 bid. As soon as it becomes 5 bid it becomes a market order if it touches 5 bid but then jumps up to 7 bid at 9 your filled at 9.
It can also hit 5 bid and sell right back off to 2 bid at 4, in which case you will be filled at 4.
Limit order if you want to pay 5 dollars you'll get filled at 5 dollar or lower and if you want to sell 10dollars then you'll get filled at 10 or better.
I hope i'm not confusing you. lol
- Location
- Huntington
I just started trading after reading for awhile and picking a few stocks I felt fit what I was looking for. I was also wondering about the stop and limit trades but that second post kind of confused me. If you place a limit to sell at 10 it will sell at 10 or wait for it to pass the 10 until the end of the day or is there some other way it decides when to execute, like a drop in value? For instance, if you make it 10 and the stock passes 10 and hits 12 then drops to 11.99 does that trigger the trade? Are you guys working with an actual broker or a site? I picked etrade after asking around and looking through it.
Stop order become market orders when hit and if the market is moving really fast it will blow right through the stop and you get a really bad fill but you will get a fill nevertheless. stop Limit orders will only fill at the price you specify when its hit you get no slippage(bad fills), but if it blows right through you will get no fill at all and probably get stuck with the stock you wanted to get out from.I would only use stops for exits to protect you -basically you are saying get me out of this stock at whatever best possible price when yor order hits the market.ith the stop limit your being selective on your price and might not get it.
I basically have the same problem as you in understanding stop and limit and then stop limit. I've read the definitions but they basically always seem the same to me and I haven't found anyone able to explain it better.
I've been trading very lightly ( mostly for long term investment ) for a few years and switched to Scottrade earlier in the year because they have no maintenance fees. Etrade charges you all kinds of fees if you dont do minimum amount of trades or maintain a minimum balance. I like etrade better for their resources and easy use of site so now that I'm doing some investing for my parents, I use etrade for their account.
http://en.wikipedia.org/wiki/Stop_order#Stop_order
This is a lot easier to understand than what others have posted.
This is a lot easier to understand than what others have posted.
- Location
- Bergen County, NJ
For a limit, if you offer stock at 10 you will be filled at that price or better.
The difference with stop is you offer a sell stop at 10, and there aren't enough bids to lift your offer you will get filled at the bid price it is at.
I actual work on a trading floor but for my personal account I use interactive brokers.
The difference with stop is you offer a sell stop at 10, and there aren't enough bids to lift your offer you will get filled at the bid price it is at.
I actual work on a trading floor but for my personal account I use interactive brokers.
Whenever there is a limit it only sells at specific price, if the stocks opens a dollar down, your limit order is not executed but if you have a stop order it will be executed. Sometime selling at any cost is better then holding. Stop is for protecting yourself. In this kind of market you must have a stop in a place.
a limit order allows you to purchase or sell a stock at a CERTAIN PRICE. if it doesnt meet that price it doesnt sell or it doesnt buy.
someone would use a stop order if they wanted to put a floor on their investment.
a buy stop order would mean that they would try to protect or limit their losses on a short sale. - which is basically buying stocks with the brokers money hoping the price will decrease and then rebuying the specific security and gaining the spread by giving the broker back his stocks and you gain the difference between the prices
a sell stop order would mean it would help put a floor on an investment incase the investment goes south. a stop order is placed below market value to stop the stock from falling to a price you do not want to keep it at .
above is general.
But when your stop order - the market price hits your target price on you put on the stop order, your sale or buy becomes a market order and you can not choose a price which you want to purchase it at.
So if an investor places a stop-limit order --> you can specify a specific price to buy or sell
so if its a limit order it doesnt necessarily buy or sell because you specified a specific price.
where as a stop order once the market price reaches your target price it is a market order and it automatically sells at the price the market values the stock at at that specific time
someone would use a stop order if they wanted to put a floor on their investment.
a buy stop order would mean that they would try to protect or limit their losses on a short sale. - which is basically buying stocks with the brokers money hoping the price will decrease and then rebuying the specific security and gaining the spread by giving the broker back his stocks and you gain the difference between the prices
a sell stop order would mean it would help put a floor on an investment incase the investment goes south. a stop order is placed below market value to stop the stock from falling to a price you do not want to keep it at .
above is general.
But when your stop order - the market price hits your target price on you put on the stop order, your sale or buy becomes a market order and you can not choose a price which you want to purchase it at.
So if an investor places a stop-limit order --> you can specify a specific price to buy or sell
so if its a limit order it doesnt necessarily buy or sell because you specified a specific price.
where as a stop order once the market price reaches your target price it is a market order and it automatically sells at the price the market values the stock at at that specific time
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TOTAL AQUARIUMS
Chief of the Tang Police
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- 1706 Lynbrook, NY, 11563
anyone else using IBD's website for research and help with picking stocks right now? Also, what % gain overall would you consider good? I know right now people would say any gain but what would generally be considered a solid %gain?
- Location
- Bergen County, NJ
I personally have no problems with them, However, Customer service is nonexistent. As long as you don't overtrade your margin you should be fine. The only problem is if market moves and you don't have margin to cover it they will close out your positions asap to cover themselves.
That's the problem with these online brokerages done electronically.
As for % for a personal commodities account I would say 3-5% a month is good.
That's the problem with these online brokerages done electronically.
As for % for a personal commodities account I would say 3-5% a month is good.
TOTAL AQUARIUMS
Chief of the Tang Police
- Location
- 1706 Lynbrook, NY, 11563
IBD is investor's business daily. I use them as a resource as do most brokerages. They have all kinds of services you can subscribe to from charts to ratings systems.
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