When managing stop loss situations I’m still trying to fully understand when to use limit orders, stop orders, and stop-limit orders. I’ve read the descriptions in paper trading, but haven’t figured out their distinct uses. Price slippage has also been a challenge for me, making it quite difficult to grasp the concepts.
How you figured them out at the beginning?
About 3 different stop loss order, plz help me better understand the different usages
byu/kwedgieyi inoptions
Posted by kwedgieyi
1 Comment
Limit order is used when the price goes up: if you find a buyer at 35, SELL. It is used to take profits.
Stop order is used when the price drops: if the price drops to 25, SELL at any price. It is used to stop losses.
Stop limit is used when the price drops but you want a minimum price: if the price drops to 25, SELL but not lower than 24. It is used to limit losses while securing a minimum price. It may become dangerous when the price fall is rapid and crosses your limit downwards without having found a buyer. You become a bag holder.