1/3/2024 0 Comments Limit tradingOr maybe you avoid that trap and place your stop order at $2.95 … like the rest of them. You have a stock trading at $3.25 and you put a stop at $3 … just like most of the other traders out there. Let me show you why I never use stop orders. Sell Stop Limit Order Exampleįor a lot of you, here’s where it gets tricky. Not only will your order likely be filled as fast as a market order, but you’ll get a price close to what you want. You set your sell limit order somewhere between $2.20 and $2.25. If you use a market order here, you open yourself to the possibility of getting less than you planned for. The other time you’ll use a sell limit order is when you want your order to be filled instantly. Once the stock reaches the $2.40 mark, your order will get filled. So you place a sell limit order for $2.40. Let’s say your stock is trading at $2.25, but you want it to hit a higher price point before you exit. There are two main ways to use a sell limit order. How to Place a Sell Limit Order (Example) That’s one of the reasons most traders lose money. Trying to get things perfect is eventually going to hurt you. What I’m looking for is the meat of the move. I never try to buy the bottom or sell the top of a trade. This degree of inexactness works for the way I trade. This gives my order a better chance of being filled. If the stock is moving especially fast, I’ll place my limit order a few cents off the current ask. I usually place a sell limit order on the ask. How to Use a Sell Limit Orderįirst, you need to evaluate your limit price options. It’s all about having a plan and sticking to it. I understand my risk tolerance and place my limit orders accordingly. This is all good to know, but I don’t use stops. It only becomes fixed when the stock reverses its movement. This is a stop order that moves in parallel to the stock price. One more wrinkle - the trailing stop limit order. This is just a bit more jargon to confuse newbies. (Not that I recommend going short in this market.) Both buy and sell stops are sometimes called stop-loss orders. On the other side are buy stop orders, often used to protect a short position. If you’re going to combine a stop order and a limit order, I’d advise at least a 5- to 10-cent window to make sure your trade goes through. This is a case where more isn’t necessarily better. Some traders will set one of these up on a quickly falling stock and completely miss their trading window. You can combine the two in a sell stop limit order - but you don’t need to. Once the price is hit, a stop will trigger a market order. These orders are meant to protect long positions with a minimum price the stock can fall to before you get out. There’s another order type that some traders use: sell stop orders. Your trading education isn’t over when you understand the bare bones of sell limit orders. It’s where you can learn to follow repeatable patterns and skip the get-rich-quick schemes. Not sure where to draw the line? Start at the beginning with my 30-Day Bootcamp. They usually crash back down to earth after a hype-driven rally.ĭon’t make the classic newbie mistake of going for home runs. Lots of the penny stocks I trade are pumped-up garbage. One thing you’re going to need to do before using a sell limit order - shake that money mindset! If you’re targeting a price that’s too high, you might lose out on the trade altogether. Once the stock hits that minimum of 13 cents, your order will be filled. You decide that it should make 15 cents before the rally ends, and you set your sell limit order at 13 cents to ensure a tidy profit. It’s already spiked up from 8 cents, and the volume is growing. Let’s say you enter a position at 10 cents a share. Now comes the part where you learn how to use limit orders. That way, you guarantee the deal you end up making is one you’re happy with. When you’re making a deal, you don’t say, “I’ll sell for whatever the going rate is.” You find out the rate, then kick it up a notch to what you think the market can stand. Think of it as a trader’s way of being a good negotiator. 10 This Is Just One Piece of the PuzzleĪ sell limit order is a minimum price you set for selling a stock.9.4 What Is a Sell Stop Limit Order Example?.9 Frequently Asked Questions About Sell Limit Orders.5 How to Place a Sell Limit Order (Example).
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