What is Stop-limit order?
Stop-limit buyurtma
In short
Turns into a limit order once the stop price is hit. If price gaps through, it may not fill at all.
A stop-limit order has two prices: the stop price (the trigger) and the limit price (the worst price you will accept). When the price reaches the stop, the order activates and becomes an ordinary limit order — it fills only at the limit price or better.
How it differs from a plain stop
A plain stop order becomes a market order when triggered: the exit is guaranteed, the price is not. A stop-limit is the reverse: the price is capped, but the exit is not guaranteed. If the price drops sharply and jumps past your limit (a gap), the order does not fill and you remain in the position.
Where it is used
- Protection (sell stop-limit). Works well when the price drifts lower, and limits slippage. But at the most dangerous moment — a gap after earnings or bad news — it may not protect you.
- Breakout entries (buy stop-limit). Buying when the price clears resistance, without chasing it too high.
Choosing the stop and the limit
The distance between the stop and the limit is the order's "breathing room". Too narrow, and the order will not fill in a fast market; too wide, and it is no different from a plain stop. Many traders set that distance based on the stock's typical movement (ATR) and its spread.
Bad news came out overnight and price opened at $45 after closing at $49.50. A plain stop became a market order and sold near $45 (−10%). The stop-limit ($47/$46) did not fill: price was below $46, so the position stayed open while price slid towards $43.
Example
You bought 100 shares of a fictional stock at $40. Stop-limit: stop $37.00, limit $36.50.
- Slow decline: the price reaches $37 → a sell limit at $36.50 activates and fills around $36.95. Loss ≈ ($40 − $36.95) × 100 = $305.
- Gap: after a bad report the stock opens at $33. The stop triggers, but there are no buyers above $36.50 → the order does not fill. Your paper loss is now ($40 − $33) × 100 = $700, and the price could fall further.
For comparison: a plain stop-market would have sold around $33 in the same gap — a $700 loss, but you would be out of the position.
Mistakes and tips
Do not rely on a stop-limit as your only protection through earnings or major news — it may not fill in a gap.
For a sell, set the limit a little below the stop; putting both at the same price makes a missed fill more likely.
If a stop-limit triggers but does not fill, reassess straight away: your planned exit now needs a manual decision.
Frequently asked questions
- Why didn't my stop-limit fill?
- The price hit the stop but moved quickly past the limit, leaving no buyers (or sellers) at your price. The order waits until the price comes back to the limit.
- Is a stop-limit or a plain stop better for a stop-loss?
- A plain stop guarantees the exit, a stop-limit guarantees the price. Many traders consider a guaranteed exit more important for capping losses, but it is a personal choice.
Learn it in the Academy
This term is covered with hands-on examples and a quiz in these lessons of the interactive course.
- How the US market worksExchanges and brokers, sessions in Tashkent time, spread and liquidity, five order types with examples, T+1, costs and fractional shares.Open lesson · 12 min
- Stop-loss: admitting you're wrong in timeWhere to put the stop (structure and ATR), which types exist, gaps and slippage, trailing methods, the pros and cons of moving to breakeven, and the costliest mistakes.Open lesson · 11 min
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