What Is Stop-Limit Order?
A stop-limit order combines two prices: the stop price (which triggers the order) and the limit price (the maximum/minimum you'll accept). When price hits the stop, the order becomes active as a limit order at the limit price.
Example: stop $98, limit $97.50 on a long position. If price drops to $98, the order activates trying to sell at $97.50 or higher. If price gaps below $97.50 (e.g. on news), the order doesn't fill and you stay in the position — which can be worse than a regular stop.
Stop-limit is useful when you want price control more than guaranteed execution: thinly-traded names where slippage could be severe, or after-hours protection where you don't want to sell at panic prices. The tradeoff is that in fast moves, you may be left holding the position.
Related terms
- Stop Loss — A predefined exit price that limits losses if a trade moves against you.
- Limit Order — An order to buy or sell at a specified price or better — guarantees price, not execution.
- Market Order — An order to buy or sell immediately at the best available price — guarantees execution, not price.
- Slippage — The difference between the expected fill price of an order and the actual execution price.