Confused : Limit order Vs Stop Orders
- Thread starter a_tokeria
- Start date
a limit order is an order to buy or sell a security at a specific price or better. A Stop order is an order to buy or sell at the MARKET PRICE once the security has traded at a specified price called the stop price. A stop order becoems a market order once the stop price is reached. I believe a limit order will only buy or sell above or below a specified price. If price goes back up or down the order will be stopped. I think 
jg1996business
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- Jun 18, 2026
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Just remember that if you are buying, the limit is placed below the market price.....if you are selling the limit is placed above the market price.
The opposite is true for stops.
The opposite is true for stops.
- Thread starter
- #5
jg : good tip. So you mean
if you are buying, the limit is placed below the market price.....if you are selling the limit is placed above the market price.
if you are buying, the stop is placed above the market price.....if you are selling the stop is placed below the market price.
What do they mean by "MARKET PRICE" and "MARKET ORDER" ???
if you are buying, the limit is placed below the market price.....if you are selling the limit is placed above the market price.
if you are buying, the stop is placed above the market price.....if you are selling the stop is placed below the market price.
What do they mean by "MARKET PRICE" and "MARKET ORDER" ???
A market order is executed at "the market" meaning that when you want to buy stock, you buy it at whatever the stock is trading at. If you wanted to put in a buy-stop order at $43 for a stock trading at $40, you would be saying, "I'd buy that stock any point up till $43. Then its too expensive for me to buy." If you were putting in a buy-limit order at $35 for a stock trading at $40 you are saying "the stock is too expensive right now, but if it drops below $35 then I'd want to buy it at long as it stays below $35. If it goes back over, dont buy."
LIMIT ORDER: TO BUY AT A SPECIFIC PRICE OR BETTER, FOR EXAMPLE XYZ STOCK IS TRADING AT 45, YOU CAN PUT IN ORDER TO BUY THE STOCK SAY AT 44.75 OR BETTER, THAT IS A BUY LIMIT, SELL LIMIT XYZ IS TRADING AT 45 YOU CAN PUT IS SELL LIMIT TO
SELL AT 45.25 OR BETTER
STOP ORDERS CAN BE BUY STOPS OR SELL STOPS, OR STOPS WITH LIMITS, STOPS WITHOUT LIMITS BECOME MARKET ORDERS ONCE YOU STOP PRICE IS HIT, SO YOU MAY GET MORE OR LESS THAN THE STOP PRICE YOU ENTERED, UNLESS YOU ENTERED A STOP LIMIT
FOR EXAMPLE YOU ARE LONG 1000 OF XYZ THAT IS TRADING AT 45, HOWEVER IF THE STOCK STARTS TO DECLINE AND YOU WANT TO BE SURE YOU NOT CAUGHT IN A MAJOR DOWN TREND, YOU CAN ENTER A STOP SELL AT 43, NOTICE STOP SELLS ARE BELOW THE MARET PRICE OF THE STOCK, AS SOON AS THE STOCK TRADES AT 43 YOU STOP ODER WILL BECOME A MARKET AND YOU WILL GET THE NEXT BEST MARKET PRICE WHICH COUD BE ABOVE OR BELOW YOUR STOP PRICE. HOWEVER IF YOU ENTERED A STOP LIMIT AT 43, AND THE STOP TRADES OR GAPS BELOW 43, YOU COULD MISS THE MARKET AND NOT GET EXCECUTED WHILE THE STOCK TANKS WAY BELOW YOUR STOP PRICE.
STOP BUYS ARE ABOVE THE MARKET PRICE OF THE STOCK, SAY YOU ARE SHORT 1000 SHARES OF XYZ COMPANY AT 43, THE STOCK MARKET PRICE IS NOW 33 SO YOU HAVE MADE 10 POINTS OR YOUR SHORT POSITION, YOU MAY WANT TO PROTECT YOUR GAIN IF THE STOCK STARTS TO RALLY, SO YOU MAY WANT TO PUT IN A BUY STOP AT 35 OR SO TO COVER YOUR SHORT IN CASE STOCK STARTS TO RALLY. WHEN STOCK HITS 35 YOUR STOP BUY WILL BECOME A MARKET ORDER AND YOUR BUY WILL BE EXECUTED.
HOPE THIS IS HELPFUL
SELL AT 45.25 OR BETTER
STOP ORDERS CAN BE BUY STOPS OR SELL STOPS, OR STOPS WITH LIMITS, STOPS WITHOUT LIMITS BECOME MARKET ORDERS ONCE YOU STOP PRICE IS HIT, SO YOU MAY GET MORE OR LESS THAN THE STOP PRICE YOU ENTERED, UNLESS YOU ENTERED A STOP LIMIT
FOR EXAMPLE YOU ARE LONG 1000 OF XYZ THAT IS TRADING AT 45, HOWEVER IF THE STOCK STARTS TO DECLINE AND YOU WANT TO BE SURE YOU NOT CAUGHT IN A MAJOR DOWN TREND, YOU CAN ENTER A STOP SELL AT 43, NOTICE STOP SELLS ARE BELOW THE MARET PRICE OF THE STOCK, AS SOON AS THE STOCK TRADES AT 43 YOU STOP ODER WILL BECOME A MARKET AND YOU WILL GET THE NEXT BEST MARKET PRICE WHICH COUD BE ABOVE OR BELOW YOUR STOP PRICE. HOWEVER IF YOU ENTERED A STOP LIMIT AT 43, AND THE STOP TRADES OR GAPS BELOW 43, YOU COULD MISS THE MARKET AND NOT GET EXCECUTED WHILE THE STOCK TANKS WAY BELOW YOUR STOP PRICE.
STOP BUYS ARE ABOVE THE MARKET PRICE OF THE STOCK, SAY YOU ARE SHORT 1000 SHARES OF XYZ COMPANY AT 43, THE STOCK MARKET PRICE IS NOW 33 SO YOU HAVE MADE 10 POINTS OR YOUR SHORT POSITION, YOU MAY WANT TO PROTECT YOUR GAIN IF THE STOCK STARTS TO RALLY, SO YOU MAY WANT TO PUT IN A BUY STOP AT 35 OR SO TO COVER YOUR SHORT IN CASE STOCK STARTS TO RALLY. WHEN STOCK HITS 35 YOUR STOP BUY WILL BECOME A MARKET ORDER AND YOUR BUY WILL BE EXECUTED.
HOPE THIS IS HELPFUL