What's the Difference Between Stop Loss and Limit Orders?

This is a discussion on What's the Difference Between Stop Loss and Limit Orders? within the New to Trade2Win forums, part of the Reception category; A stop loss is just what it says, it stops you losing more than you want to, or does it? ...

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Old Jun 18, 2008, 7:58pm   #9
Joined Nov 2006
A stop loss is just what it says, it stops you losing more than you want to, or does it?
Ok so you own shares that cost a 100p each. They start falling. You don't want to sell yet but do not want to lose too much money, let's say more than half your money. Answer; put on a stop loss of 50p. Now in theory if your stock drops to 50p your broker will sell, thereby stop(ping) your loss at 50p.
Now in practice is this possible? Well say the stock is now 51p, the broker cannot sell yet.Then, whoops, they are 45p. Under "best endeavours" the broker would sell at 45p
There is such a thing as a guaranteed stop loss, and this is where the broker would take the 5p loss, but somewhere you are going to pay for that privelege.
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Last edited by raysor; Jun 18, 2008 at 8:08pm.
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Old Aug 12, 2008, 12:58pm   #10
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What's the difference between Stop Loss and Limit orders?

limit orders means that you specify certain price to close your order at so that you dont

lose more money or to gain certain profit,stop loss order is the one that protect you from

losing more money


for example if you open an order at price 1.3456 then you specify a price to close your

order at so that you dont lose more money,lets say the closing price will be 1.3450 this

means that your order will be closed automatically at this price to prevent more loss

you can also specify a higher price gurrantee your profit,llets say the closing price will

be 1.3466 when your position reaches this price it will be closed and you will gain 10 pips

which means that you are lucky
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Old Aug 12, 2008, 3:57pm   #11
 
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Quote:
Originally Posted by fxfxforex View Post
limit orders means that you specify certain price to close your order at so that you dont

lose more money or to gain certain profit,stop loss order is the one that protect you from

losing more money


for example if you open an order at price 1.3456 then you specify a price to close your

order at so that you dont lose more money,lets say the closing price will be 1.3450 this

means that your order will be closed automatically at this price to prevent more loss

you can also specify a higher price gurrantee your profit,llets say the closing price will

be 1.3466 when your position reaches this price it will be closed and you will gain 10 pips

which means that you are lucky
You confused limit orders with Stop-Loss and Take-profit orders fxfxforex.

Buy Limit - an order to open a Buy position at a lower price than the price at the moment of placing the order, therefore you believe the market will bounce back.
It will hit that price and then the only way is up.

Sell Limit - an order to open a Sell position at a price higher than the price at the moment of placing the order, therefore you believe the market will bounce back.
It will hit that price and then the only way is down.


Another point of view to look at this: you can use the Limit orders to match existing open positions, I think this is what you where trying to say.
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Old Aug 27, 2009, 2:28pm   #12
 
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Hi,
Fidelity offers two choices in this trade--"trailing stop loss" or "trailing stop limit" If I was to place an order for a 10% trailing stop on a stock which was then at $20, what would be the difference between the "trailing stop loss" and the "trailing stop limit"?
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Old Nov 9, 2010, 7:58am   #13
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re: What's the Difference Between Stop Loss and Limit Orders?

Stop orders are used when you expect the price to continue in a particular direction. For example, if EUR/USD is rising and you expect it to keep doing so, you can place a buy stop order above the current market price. Or if GBP/USD is dropping and you expect it to keep falling, you can set a sell stop order below the current market price.

Limit orders, on the other hand, are typically used when the price is expected to reverse upon hitting the entry order. If EUR/USD is rising and there's resistance above the current market price, you can set a stop limit order at the resistance so you'd be short once it hits that area. If GBP/USD is dropping and approaching support but you expect it to bounce, you can set a buy limit at support so you'd be long once it hits that area.

http://www.babypips.com/school/types-of-orders.html
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Old Nov 30, 2010, 7:35am   #14
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re: What's the Difference Between Stop Loss and Limit Orders?

A limit order is an order with restrictions on the maximum price to be paid or the minimum price to be received. As an example, if the current price of USD/JPY is 117.00/05, then a limit order to buy USD would be at a price below 117.05. (ie 116.50).

A stop loss order is an order type whereby an open position is automatically liquidated at a specific price. Often used to minimize exposure to losses if the market moves against an investor's position. As an example, if an investor is long USD at 156.27, they might wish to put in a stop loss order for 155.49, which would limit losses should the dollar depreciate, possibly below 155.49.
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Old Dec 20, 2010, 3:27am   #15
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re: What's the Difference Between Stop Loss and Limit Orders?

The main difference between these two exchanges is that the limit acts under favorable circumstances: it can buy at low prices, and sell at high prices, whereas the stop-limit trade acts to cut loss. This order will buy stock that is rising before it gets too high, and sell falling stock to prevent further loss, like the standard stop-loss order, but it has an extra component.
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Old Feb 2, 2011, 5:36pm   #16
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re: What's the Difference Between Stop Loss and Limit Orders?

There is now a good selection of answers to this FAQ. To avoid a lot of unnecessary duplication, from now on - please provide specific examples of when you use the order types that you do and provide reasons as to why you use them. Practical examples are what's required, ideally accompanied by annotated charts. Posts that don't add anything to the answers provided so far are liable to be subject to some rigorous monthly housekeeping!

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