Stop-loss vs stop-limit orders: What are they and how do you use them? FXCM Markets


You can often expect liquidity to pick up as the approaches them. You’re still holding 900 shares that are below your stop-loss level. Let’s look at some real-world examples where a stop-limit order could be a part of a well-planned trading strategy. You can use the order to exit your long position if the price declines. What this does is significantly reduce your downside risk.

How do you use a trailing stop to buy?

With a buy trailing stop order, the stop price follows, or trails, the lowest price of a stock by a trail that you set. If the stock rises above its lowest price by the trail or more, it triggers a buy market order and is executed at the best price currently available.

Since there’s a trailing stop set for the end of day, the presence of these cases are already much more minimized. “Above the market” refers to an order to buy or sell at a price higher than the current market price. FXCM Markets is not required to hold any financial services license or authorization in St Vincent and the Grenadines to offer its products and services. For more information about the FXCM’s internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms’ Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Trailing Stop Orders: Mastering Order Types

The difference between these two conditions is important and helps explain why a stop-limit, which combines both, offers investors more control over trading prices. Stock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. Investing in stock involves risks, including the loss of principal.

Before you delve into trading stocks, it’s crucial to understand the different types of orders and when they should be employed. Securities or other financial instruments mentioned in the material posted are not suitable for all investors. Before making any investment or trade, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

How a trailing stop order works

However, if the share price rises, the stop-loss rises with it, remaining 10% below the market price. So, if the share price rises to £15, your trailing stop-loss also rises to £13.50. If the share price dropped to £13.50 at this point, your trailing stop-loss would be triggered and a profit of £3.50 would be realised.

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She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She lives in the Chicago area with her son, dog and two cats. This order type is great to know, especially as it relates to volatility and trading volume.

If you leave it blank the Stop or trigger price will automatically be set to the last traded price minus the trail amount. If End Time is selected and the End Time is reached, the order is deleted and the specified End Action is applied to its child orders. If the trading session is closed when the End Time is reached, the delete request will fail, leaving working GTC child orders on the exchange. It is your responsibility to delete these orders when the exchange re-opens. A TT Trailing Limit order goes into the Working state when the Start Time is reached or when the order is entered without a Start Date/Time.


An investor can avoid the risk of a stop order executing at an unexpected price by placing a stop-limit order. A stop-limit order includes a limit price that requires the order to be executed at the limit price or better – but the limit price may prevent the order from being executed. The trailing stop-limit order works the same as the trailing stop-loss, but with a limit order attached to it.

A trailing stop limit order is designed to allow an investor to specify a limit on the maximum possible loss, without setting a limit on the maximum possible gain. The limit order price is also continually recalculated based on the limit offset. A “Buy” trailing stop limit order is the mirror image of a sell trailing stop limit, and is generally used in falling markets.

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The stop-limit order triggers a limit order when a stock price hits the stop level. The right investing strategy, coupled with trailing stops, can be extremely profitable. A trailing stop is more flexible than a fixed stop-loss order, as it automatically tracks the stock’s price direction and does not have to be manually reset like the fixed stop-loss. Once it moves to lock in a profit or reduce a loss, it does not move back in the other direction. Cory Mitchell, CMT is the founder of

Stop Orders: Mastering Order Types

After a trailing stop limit order is triggered, there is no guarantee that the order will be filled. If the order is not filled during its time in force, it will be canceled automatically by the system. A trailing stop limit order will only be triggered during the preset trading period. A trailing stop limit order is designed to protect gains by enabling a trade to remain open and continue to profit as long as the price is moving in a favorable direction. The Charles Schwab Corporation provides a full range of brokerage, banking and financial advisory services through its operating subsidiaries. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. , offers investment services and products, including Schwab brokerage accounts.

Jane told the buy trailing stop limit order example to sell 100 shares for no less than $600 each, but only 50 shares were sold. Probably because the share price was falling quickly, and the broker could only sell 50 shares before the market price fell below $600. The sell stop-limit order was given to the broker, but nothing happened. Because if Tesla’s market price dropped below $600, the broker didn’t sell. In the securities business, this is called no execution.

That way you still ride the dips, and aren’t trying to time the market. Considering they receive millions of orders a day, why wouldn’t they manipulate the order of processing buy/sell orders to increase their transaction fee take. Of course, it’s a personal decision and it’s totally up to you.

So you might place a stop-limit order to buy 1,000 shares of XYZ, up to $9.50, when the price hits $9. One thing that many investors will realize throughout their investing journey is that trading in and out of stocks can be extremely expensive due to… These days, I’ve found that the trailing stop hasn’t worked for me as a value investor who buys stocks that can take a while to recover .

  • A stop limit order is not executed if the price quickly falls below the stop limit level.
  • Please refer to Titan’s Program Brochure for important additional information.
  • However, you can never eliminate market and investment risks entirely.
  • You place a stop-limit order to sell the shares in case your forecast is incorrect.
  • These types of orders are ideal for traders and investors who prefer to make trades that have components of both stop orders and limit orders.

Using a 10% trailing stop, your broker will execute a sell order if the price drops 10% below your purchase price. If the price never moves above $1,000 after you buy, your stop loss will stay at $900. If the price reaches $1,010, your stop loss will move up to $909, which is 10% below $1,010. If the stock moves up to $1250, your broker will execute an order to sell if the price falls to $1,125. While trailing stops lock in profit and limit losses, establishing the ideal trailing stop distance is difficult. There is no ideal distance because markets and the way that stocks move are always changing.


Trigger orders on popular cryptocurrency exchanges and trade 24/7. Access powerful algorithmic orders to maximise your profits. There is also a risk of execution, especially in a time of high volatility. If this happens, the order may be initiated at a different price than what you initiated. A stock split happens when a company whose share price is very high decides to split it.

It’s smart to set stop-limit orders where you expect other traders to buy and sell. These levels are often major support and resistance levels or previous key swing highs and lows. So you may pay a minimum order fee to your broker for each trade. Your stop-limit order may get filled in three separate trades over multiple days due to the lack of liquidity. You can end up paying the minimum order fee three times. It’s a low-volume stock and you’re only able to sell GAL 100 shares.

When the moves up by more than 5%, reaching or exceeding the trailing price of 8,400 USDT, a buy order will be issued to the order book. Investments in stocks, options, ETFs and other instruments are subject to risks, including possible loss of the amount invested. The value of investments may fluctuate and as a result, clients may lose the value of their investment. Past performance should not be viewed as an indicator of future results.

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