Orders & execution
Stop-limit order
A stop that becomes a limit order rather than a market order, capping how bad a fill you accept.
How it works
You set two prices: the stop that activates the order, and the limit beyond which you will not trade. It protects you from filling at an absurd price during a spike.
The protection has a cost. In a genuine collapse, the price can move straight through your limit and the order simply never fills, leaving you holding the position you were trying to exit.
Where it misleads people
This is the trade-off in one sentence: a stop guarantees you get out at an unknown price; a stop-limit guarantees a price but not that you get out.
Related terms
More in Orders & execution
- Time in the market
- Trailing stop
- Market timing
- Day order
- Market order
- Dollar-cost averaging
- Fill-or-kill
- Good-till-cancelled
All 12 Orders & execution terms · The full glossary, 433 terms
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.