Stock Trading Terms Stop Limit
Again, what’s the difference between a stop order and limit order?
From what I can tell, a limit order allows you to set the exact price you want to buy or sell stock. If the stock is traded at that price, your order will be executed, but it will not be executed if the market price changes before your order can be executed.
With a stop order, on the other hand, you set a price you’d like to buy or sell shares. Your order will be executed once the stock hits your determined price regardless what the market price is currently trading at.
Is that at all correct? Please answer in layman’s terms. Please reread your answers to make sure they make sense.
Thank you.
Yes, you have it correct. A limit order will only execute at the price that you set, or better. A stop order becomes a market order once it is triggered. So it will be filled at the best available price, regardless of what the original stop price was. It could be better, or worse. Whereas a limit order can never execute at a worse price.
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