Stop-limit order

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Stop-limit order

A stop order that designates a price limit. Unlike the stop order, which becomes a market order once the stop is reached, the stop-limit order becomes a limit order.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Stop-Limit Order

A stop order that becomes a limit order when the stop price is reached.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

stop-limit order

A specialized order in which a limit order and a stop order are combined. Once the specified stop price has been reached or exceeded, the stop-limit order becomes a limit order. A stop-limit order differs from a stop order, which becomes a market order when the stop price has been reached or exceeded. A stop-limit order to buy must have a stop-limit price above the market price; conversely, a stop-limit order to sell must have a stop-limit price below the security's market price. In response to a stop-limit order specifying "sell 100 GY 15 stop limit," once the stock sells at or below $15, the order becomes a limit order to sell 100 shares at a price of $15. A variation of the stop-limit order specifies a limit price lower than the stop price.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Stop-limit order.

A stop-limit is a combination order that instructs your broker to buy or sell a stock once its price hits a certain target, known as the stop price, but not to pay more for the stock, or sell it for less, than a specific amount, known as the limit price.

For example, if you give an order to buy at "40 stop 43 limit," you might end up spending anywhere from $40 to $43 a share to buy a stock, but not more than $43.

A stop-limit order can protect you from a rapid run-up in price -- such as those that may occur with an initial public offering (IPO) -- but you also run the risk that your order won't be executed because the stock's price leapfrogs your limit.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
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