Buy Limit vs. Sell Stop Order: An Overview

Advanced traders typically use trade order entries beyond just the basic buy and sell market order. Simple buy and sell orders at the market price will usually ensure your trade occurs but it may also include slippage which is the amount you give up to market supply and demand directions when making a basic buy or sell market order. In general market orders are the simplest and most commonly available orders through a brokerage system, executing immediately at the market price.



Buy Limit Order

Both buy and sell limit orders allow a trader to specify their own price rather than taking the market price at the time the order is placed. Using a limit order for a buy allows a trader to specify the exact price that they want buy shares at. This price is typically a calculated entry point.


Limit buy orders can be used in any instance where a trader seeks to buy stock at a specified price. Using margin, a trader would still simply place a limit buy order for the price in which he seeks to buy.

Sell Stop Order

A sell stop order is a stop order used when selling. A stop order is much different than a limit order. A stop order in general includes a stop price that then triggers the allowance of a market order.

Sell stop orders have a specified stop price. In the case of a stop sell order, a trader would specify a stop price to sell. If the stock’s market price moves to the stop price then a market order to sell is triggered. Different than limit orders, stop orders can include some slippage, since there will typically be a marginal discrepancy between the stop price and the following market price execution.


When using margin, a stop sell can be set to initiate a short sell. When the stock is owned by the trader, a stop sell is usually used to limit losses or manage already accumulated profits.


Key Differences



Key Takeaways
