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I have a question about stop limit sell order. Let’s say I own 10 ABC stock @ $100 each. I would like to place the following stop limit sell order

Current ABC stock price= $120
Stop price = $180
Limit price = $130

I assume the above sell order will only be filled if the current stock price climbs to $180 and then recedes back to $130. In other words, I don’t want the sell order to be filled @ $130 unless the stop price is met first. Does this sell order make sense? Are my assumtions correct about how this sell order would play out?

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I think that you would use a trailing stop limit order allows you specify a limit on the maximum possible loss without setting a limit on the maximum possible gain.

A SELL trailing stop limit moves with the market price, and continually recalculates the stop trigger price at a fixed amount below the market price, based on the user-defined "trailing" amount. The limit order price is also continually recalculated based on the limit offset. As the market price rises, both the stop price and the limit price rise by the trail amount and limit offset respectively, but if the stock price falls, the stop price remains unchanged, and when the stop price is hit a limit order is submitted at the last calculated limit price.

Contact your broker to see if they offer this type of order.

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  • I will look into this. Thank you for suggesting. – Andy Dec 22 '20 at 20:55
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Your interpretation is not correct. A limit sell order means sell at that price or higher. So once the stop price is reached, your order becomes a limit sell at $130, which will be triggered immediately if the price of $180 has been breached. The only thing it prevents is the stock reaching $180 and immediately dropping below $130 and you selling below that level.

It sounds like you want a "stop-stop" order, where a second stop-loss order is placed after a price has been reached. I have not seen this type of order offered by any online brokers; you may need to talk to a broker directly to see if they can put in this type of order.

Or, with that large of a drop, you could just put in an "alert" at 180 and then manually put in a stop-loss order of $130 once the alert triggers. You should have plenty of time to put in an order before the stock goes from $180 to $130.

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  • Thank you! That makes sense and I don’t believe that anyone offers a stop-stop sell order either. I will try the alert idea. – Andy Dec 22 '20 at 20:54

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