We are here to help

What are stop and limit orders?

Choosing your level

As well as opening a position at the current market price, you can also place an order to buy or sell if the market reaches a certain level, designated by you, higher or lower than the current market price. These are known as pending orders and there are 2 types, limit and stop. A limit order is an order placed to fill at a level better than the current market.

For example, if gold is trading at $1,400/oz, you can place a limit order to buy gold at $1,350. If the market reaches the level you have selected, the limit order will ‘fill’ and the system will automatically open a new buy position at that level.

A stop order, by contrast, is an order placed to fill at a level worse than the market. To use the same example, if gold is trading at $1,000/oz, you may place a stop order to buy gold if it reaches $1,080/oz. Again, if the level is reached the system will automatically open a new buy position at that level. For sell positions, limit orders are set above the market price and stop orders are set below the market price.

Was this article helpful?
0 out of 0 found this helpful