| an order from a customer to a broker to sell a security if the market price drops below a designated level. |
Stop-limit Order
An order placed with a broker to buy or sell at a specified price (or better) after a given stop price has been reached or passed. This is essentially a combination of a stop order and a limit order into one order and allows the investor to better control their entry or exit price of a security.
Investopedia Commentary
A stop order is an order that becomes executable once a set price has been reached and is filled at the current market price. A limit order is one that limits the entry or exit price to a set price or better. By combining the two orders it prevents the stop order from being executed at the market price which could be much different then what the investor originally wanted by putting a limit on the price.
For example lets assume that ABC Inc. is trading at $40 and an investor has put in a stop-limit order to buy at $45. If the price of ABC Inc. moves above $45 the stop order to buy the security becomes executable but because their is also a limit order attached it limits the price that the shares can be purchased to $45 or less. In terms of buying a stock it allows investors to buy when the stock has upward momentum behind (moving from $40 to $45).
Related Links
The Stop-Loss Order - Make Sure You Use It
Limiting Losses
The Basics Of Order Entry
See also: Breakout, Broker, Buy Stop Order, Limit Order, Order, Stop Loss Order, Stop Order, Stop-Loss Order, Stopped Out
stop-limit order
sell 100 GY 15 stop limit,
once the stock sells at or below $15, the order becomes a limit order to sell 100 shares at a price of $15. A variation of the stop-limit order specifies a limit price lower than the stop price.stop order
An order to buy or to sell a security when the security's price reaches or passes a specified level. At that time the stop order becomes a market order and the executing broker, usually the specialist, obtains the best possible price. A stop order to buy must be at a price above the current market price and a stop order to sell must have a specified price below the current market price. See also buy stop order, electing sale, protective stop, sell stop order, stop-limit order, stop price, trailing stop.
An order from the SEC suspending a registration statement when an omission or a misstatement has been found.
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