What is Stop Limit Order?
A stop limit order combines a stop order and a limit order. Once the stop price is triggered, it becomes a limit order rather than a market order, giving price protection but no execution guarantee.
Stop Limit Order Explained
Stop limit orders provide more control than regular stop orders because you set both the trigger price and the limit price. However, in fast-moving markets, the price may gap past your limit, and your order may not fill at all, leaving you in a losing position.
Real-World Example
You own a stock at $100 and place a stop limit with a stop at $95 and a limit at $94. If the price drops to $95, a limit order to sell at $94 is placed. If the price gaps down to $92, your order won't fill because the market price is below your limit.
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