Stop limit order | Robinhood

Stop limit order

A stop limit order combines the features of a stop order and a limit order. When the stock hits a stop price that you set, it triggers a limit order. Then, the limit order is executed at your limit price or better. Investors often use stop limit orders in an attempt to limit a loss or protect a profit, in case the stock moves in the wrong direction.

Keep in mind, short-term market fluctuations may prevent your order from being executed, or cause the order to trigger at an unfavorable price. For example, if the market jumps between the stop price and the limit price, the stop will be triggered, but the limit order won't be executed.

Also, once your stop order triggers a limit order, there has to be a buyer and seller on both sides of the trade for the limit order to execute. If there aren’t enough shares in the market at your limit price, it may take multiple trades to fill the entire order, or the order may not be filled at all.

Buy stop limit order

With a buy stop limit order, you can set a stop price above the current price of the stock. If the stock rises to your stop price, it triggers a buy limit order. Shares will only be purchased at your limit price or lower.

Example

MEOW is currently trading at $5 per share. You want to wait to purchase MEOW because you think it’ll fall to a lower price. You also think that if MEOW reaches $8 it may go higher. To help minimize your potential costs, you set a stop price at $8. You also don’t want to pay more than $8.05 for MEOW, so you set a limit price at $8.05.

  • If MEOW rises to $8 or higher, your buy stop limit order triggers a buy limit order. Then, MEOW is purchased if shares are available at $8.05 or lower.
  • If MEOW stays below $8, a buy limit order isn’t triggered and no shares are purchased.

These examples are shown for illustrative purposes only. In general, understanding order types can help you manage risk and execution speed. However, you can never eliminate market and investment risks entirely. It’s usually best to choose an order type based on your investment goals and objectives.

Sell stop limit order

With a sell stop limit order, you can set a stop price below the current price of the stock. If the stock falls to your stop price, it triggers a sell limit order. Shares will only be sold at your limit price or higher.

Example

MEOW is currently trading at $10 per share. You want to wait to sell MEOW because you think it’ll rise to a higher price. To help protect yourself in case MEOW reverses itself and begins falling, you set a stop price at $8. You also don’t want to receive less than $7.95 per share of MEOW, so you set a limit price at $7.95.

  • If MEOW falls to $8 or lower, your sell stop limit order triggers a sell limit order. Then, MEOW is sold if shares are available at $7.95 or higher.
  • If MEOW stays above $8, a limit order isn’t triggered, and you keep your shares.

These examples are shown for illustrative purposes only. In general, understanding order types can help you manage risk and execution speed. However, you can never eliminate market and investment risks entirely. It’s usually best to choose an order type based on your investment goals and objectives.

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All investing involves risk.

Brokerage services are offered through Robinhood Financial LLC, (“RHF”) a registered broker-dealer (member SIPC) and clearing services through Robinhood Securities, LLC, (“RHS”) a registered broker dealer (member SIPC). Cryptocurrency services are offered through Robinhood Crypto, LLC (“RHC”) (NMLS ID: 1702840). The Robinhood Money spending account is offered through Robinhood Money, LLC (“RHY”) (NMLS ID: 1990968), a licensed money transmitter. Credit card products are offered by Robinhood Credit, Inc. (“RCT“) (NMLS ID: 1781911 and issued by Coastal Community Bank, pursuant to a license from Visa U.S.A. Inc.

The Robinhood Cash Card is a prepaid card issued by Sutton Bank, Member FDIC, pursuant to a license from Mastercard® International Incorporated. RHF, RHY, RHC and RHS are affiliated entities and wholly owned subsidiaries of Robinhood Markets, Inc. RHF, RHY, RHC and RHS are not banks. Securities products offered by RHF are not FDIC insured and involve risk, including possible loss of principal. Cryptocurrencies held in RHC accounts are not covered by FDIC or SIPC protections and are not regulated by FINRA. RHY products are not subject to SIPC coverage but funds held in the Robinhood Money spending account and Robinhood Cash Card account may be eligible for FDIC pass-through insurance (review the Robinhood Cash Card Agreement and the Robinhood Spending Account Agreement).

Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.

Commission-free trading of stocks, ETFs and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities and certain OTC securities electronically. Keep in mind, other fees such as trading (non-commission) fees, Gold subscription fees, wire transfer fees, and paper statement fees may apply to your brokerage account. Please see Robinhood Financial's Fee Schedule to learn more.

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