Sell stop limit order
Family II · Orders
Not to be confused with stop loss, limit order, stop order.
Sell stop limit order is a conditional order type that links a stop trigger to a limit instruction. Once the stop price is reached, the order becomes a limit order to sell at the specified limit price or better. It is used to control the minimum selling price after a trigger, but it does not guarantee execution.
How it works
A sell stop limit order has two prices: a stop price and a limit price. The order remains dormant until the market trades at or through the stop price. At that point, it is activated and becomes a limit order to sell at the limit price or higher. If the market moves quickly past the limit price, the order may not fill. The order can be set for the day or until cancelled, depending on the venue.
Worked example
An investor holds a stock trading at 50.00 and wants to limit losses but also control the selling price. They place a sell stop limit order with a stop price of 48.00 and a limit price of 47.50.
Key features
- Two prices: Requires both a stop price and a limit price.
- Trigger: Becomes active only after the stop price is traded.
- Execution risk: May not fill if the market gaps below the limit price.
- Price control: Prevents selling below the limit price once triggered.
- Order type: A subtype of stop order, but with a limit constraint.
Often confused with
- stop loss
- A stop-loss order becomes a market order when triggered, aiming for execution rather than price control, whereas a sell stop limit order becomes a limit order and may not execute; the visible sign is the presence of a limit price in addition to the stop price.
- limit order
- A limit order is a direct instruction to buy or sell at a specified price or better without a stop trigger, while a sell stop limit order remains inactive until the stop price is reached; the visible sign is the stop price that must be hit first.
- stop order
- A stop order (also called a stop-market order) becomes a market order when the stop price is triggered, whereas a sell stop limit order becomes a limit order; the visible sign is that a stop order has only one price, while a sell stop limit order has both a stop and a limit price.