| Stock Trading Stop Limit | | | | get into the stock for $48 or better. This way your |
| Stop limit orders are very powerful in the stock | | | | risk to reward can be managed. Stock Trading Stop |
| market if used correctly. They can give you a new | | | | Limit |
| way of placing a trade that can potentially benefit | | | | 2. When the stock is bouncing off support. |
| you. | | | | If you are trying to catch a stock as it bounces off |
| So when might it be a good idea to place a stop limit | | | | support you might want to wait for it to start |
| order? | | | | bouncing first. But similar to the breakout you have a |
| 1. When a stock is at resistance and you are | | | | target and do not want to get filled if the stock gaps |
| expecting it to break through. | | | | up too high. |
| Say a stock is at a key level of resistance of $45. If | | | | In addition to these you should also know when not |
| the stock breaks through to $47 you are willing to | | | | to use a stop limit order. If you buy a stock for a |
| consider it a breakout and take the trade. And if it | | | | short term trade you should never use a stop limit |
| does break out you have a target of say $55. | | | | order to limit your losses. Why? Because if you have |
| Well that can be good, but what if the stock breaks | | | | a stop limit order with s top of $20 and a limit at $18, |
| through gaps up and opens at $52. Suddenly you are | | | | if the stock falls down to your stop you will only sell |
| filled at $52 and risking it coming all the way down | | | | the stock if you can sell it for $18 or higher. |
| breaking through the $45 level just to make $3. | | | | Now if the stock hits your stop you are out. If the |
| Instead you can place a stop limit order with a stop | | | | stock gaps down to say $17 you want to take the |
| of $47 and a limit of $48. This way if the stock | | | | small loss and run. You do not want to hold onto it |
| breaks up out of resistance your stop order would | | | | and have it fall to $15, $10 or even lower. |
| be triggered. But you would only get filled if you can | | | | |