What is the difference between stop and stop-limit orders?

Modified on Thu, 22 Aug at 11:06 AM

A stop order functions as a stop market order, while a limit stop order offers control over slippage. In other words, when triggered, a market order is placed in one case, and a limit order in the other.


With a stop-limit order, the exchange's order matching mechanism will provide a better price. However, in the case of high volatility or an illiquid instrument, potential slippage will be limited. But in such cases, there is no guarantee of execution. If the price quickly "slips" past the order, it may simply not be filled, and it will remain in the order book waiting for its turn. Stop limits are often used to enter a position to control the entry price.

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