How does a stop limit order work?

Why would you use a stop-limit order?

Stop-limit orders are sometimes used because, if the price of the stock or other security falls below the limit, the investor does not want to sell and is willing to wait for the price to rise back to the limit price. … If the stock price falls below $47, then the order becomes a live sell-limit order.

What is the activation price on a stop limit?

A stop limit order is an instruction you send your broker to place an order above or below the current market price. The order contains two inputs: (1) activation – the price where the limit order is activated and (2) price – which is the limit price where the order will be executed.

What should I set my stop limit at?

There are no hard-and-fast rules for the level at which stops should be placed; it totally depends on your individual investing style. An active trader might use a 5% level, while a long-term investor might choose 15% or more.

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