Sorry for asking this question. Never invested in Equities directly always thru mutual funds.
About Stop-limit order that I would like to place on a ticker symbol. Wanted to confirm my understanding is correct.
If I want to sell a stock when it hits 100$, I should place a stop-limit order with $100. It might be trading at 110$ at the moment. When & if it drops to $100, my order will be placed. Is this correct?
Thanks much
nath
Comments
You are describing a "stop" sell order. A "stop" order specifies the price at which your order becomes a market order, and a "limit" order specifies a specific price or better that you want this market order executed. The "limit" order places a limit on the market price that you will accept.
Let's say you want to sell a stock that is trading at $110 and you want to sell it at $100 but not less than $90. You place a "stop-limit" sell order of $100 (stop) and $90 (limit). Just realize that in a rapidly plunging market, the stock price may never actually trade between $100 and $90 and your order may not be filled.
On the buy side, if you are want to buy a stock with upward momentum that is trading at $100, you place a "stop-limit" buy order of $110 (stop) and $120 (limit). Again, if the stock is rocketing up and never trades in the $110-120 range, your order may not be filled.
Hope this helps.
Kevin