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Stoploss Limit - SL LMT

This is one of the most widely used intelligent orders and is most frequently used if the investor decides to minimize his or her losses and to manage their trades while exercising money management.

Example of use:

There are two basic methods for using a Stoploss order:

For a sell order: the investor has purchased securities but wants to sell these securities if their market value declines by 2% based on his or her investment strategy. This means a predetermined loss is ensured and the investor does not have to worry about a long-term decline in the value of his or her portfolio by a greater percentage.

For a buy order: the investor anticipates that if the price rises above a specific level (e.g. price rises above resistance) a growth trend will emerge and it is likely that the price will continue to strengthen. If the price does not reach this level the investor has no desire to buy the security.


Placing an order:

An investor has bought a security at USD 10.00. Currently the best bid (best price at which the investor can sell the security) is USD 12.00 (the investor realizes a profit of 20% on the security). The investor wants to "preserve" a profit of 15% and wants to sell the security if the best bid drops to USD 11.50. At the same time the investor enters a Limit Price of USD 10.00, which ensures that the security will be sold at the Limit Price (if the market fluctuates greatly if very negative news regarding the company is published, a situation can occur where after the order is activated, in this case a Stoploss order at the best offer of USD 11.50, the next best offer will be USD 9.80, and due to the investor's strategy, the Limit Price at USD 10.00 means the order will not be completed.

Based on this goal, the investor will place a sell order. In the order parameters, "Stop Price (USD") appears below the "Price (USD)" field. Enter the activation price for the Stoploss order into the "Stop Price (USD)" field (in our case the best bid is USD 11.50). The Limit Price is entered into "Price (USD)", which is the price in the worst case at which the sale can be completed (USD 10.00 in our case).

ORDER PARAMETERS:

Direction: Sell

Stop Price (USD): USD 11.50

Price (USD): USD 10.00

Quantity: 2,000 shares

Before order is placed:

Price (USD)Cumulative number of shares 
12.258,000Offer
12.225,000
12.103000
12.062,000
12.051,500
  Middle
12.00100Bid
11.95850
11.901,300
11.802,000
11.775,000

At order activation:

Price (USD)Cumulative number of shares 
11.808,300Offer
11.754,000
11.653,500
11.602,000
11.551,000
  Middle
11.501,500Bid
11.402,500
11.352,800
11.203,900
11.195,500

The order activates after best bid drops to USD 11.50.

After trade is completed:

Price (USD)Cumulative number of shares 
11.808,300Offer
11.754,000
11.653,500
11.602,000
11.551,000
  Middle
11.40500Bid
11.35800
11.201,900
11.193,500
11.175,000

Order was completed: 1500 shares at USD 11.50 and 500 shares at USD 11.40 USD.

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