Stop-Limit Order
Order Types
What it means
A stop order that, when triggered, becomes a limit order instead of a market order. It caps the price you will accept, but may not fill at all.
Example
With a stop at $95 and a limit at $94.90, if price drops to $95 the order activates -- but it fills only at $94.90 or better. If price gaps straight to $93, the order never fills.
Mistake beginners make
Beginners use stop-limits to "avoid slippage" and then watch the order skip them during a crash. The protection against bad fills becomes no fill at all -- and unlimited loss.
Related terms
- Stop Order — An order that sits inactive until a trigger price is hit, then becomes a market order. It …
- Limit Order — An order to buy or sell only at a specific price or better. It guarantees the price but no…