Stop Loss Limit

What is a Stop Loss Limit?

A stop loss limit (often called a stop-limit) is an order that helps control losses by turning into a limit order once a chosen stop price is reached. It sets two prices:

• Stop price: the trigger level.
• Limit price: the lowest (a sell order) or highest (a buy order) price you are willing to accept after the trigger. Because it becomes a limit order, it limits price, but it does not guarantee execution if the market moves past your limit.

How a Stop Loss Limit Order Works

1. You set a stop price and a limit price.
2. If the market hits the stop price, your order is activated as a limit order at the limit price.
3. The trade will only fill at the limit price or better. If price is worse than your limit, the order may not fill.

For example, you buy EURUSD at 1.10201. You place a stop loss limit order with:

• Stop price: 1.10000
• Limit price: 1.09990
• If price falls to 1.10000, your order activates and tries to sell at 1.09990 or better.
• If price gaps to 1.09970, the limit is worse than your acceptable price, so the order may not execute. Your position could remain open.

Stop Loss vs Stop Limit

• Stop loss (stop-market): Triggers a market order at the stop price.
• Execution certainty: High (it will fill).
• Price certainty: Low (may fill at a worse price in fast markets).
• Stop limit (stop-limit): Triggers a limit order at the limit price.
• Execution certainty: Not guaranteed (may not fill if price is worse than your limit).
• Price certainty: Higher (won’t sell below your limit or buy above your limit).

This is the difference between stop loss and stop limit, or said another way, stop limit vs stop loss. If you’re comparing stop loss vs stop loss limit, the first is a stop-market; the second is a stop-limit.

• Choose a stop loss (market) when getting out is critical and you must close the trade.
• Choose a stop loss limit when price matters and you prefer no fill over filling at a much worse price.