3 ms·
why not use a stop limit order? It's kind of like setting a reserve price on ebay -- sell if you want to get out of a particular position, but not if the price
by lotharbot 11y ago
why not use a stop limit order? It's kind of like setting a reserve price on ebay -- sell if you want to get out of a particular position, but not if the price gets to be too low.
- __d 11y agoIn a little more detail: A 'stop loss' order will sell once the share price falls below a threshold. It will sell using a market order, meaning whatever the current best price might be. A 'stop limit' order will sell once the share prices falls below a threshold too, but will sell using a limit order, setting a minimum price that you're prepared to be paid. In a crashing market, stop loss orders can result in you selling stocks for pennies, regardless of their rational worth. Stop limit orders protect you from excessive price drops.