A Sell Limit Order is an order to sell a specified number
of shares of a stock that you own at a designated price
or higher, at a price that is above the current market price.
This is your limit price, in other words, the minimum price
you are willing to accept to sell your shares.
Once a stock's price trades at or above the price you have
specified, your shares will be sold at that price or higher
IF the stock's price continues to trade at or above your
specified price long enough for your order to be filled.
Example: Suppose you own 100 shares of Target Corp
(TGT), and it is currently trading at $45 per share. You
would like to sell the shares and take your profits if the
stock's price reaches $50 per share, as you feel the stock's
price is not going to go much higher than $50.
You place a Sell Limit Order @ $50 on 100 shares
of TGT. Now suppose the price trades up to $50. As long
as the price remains above $50 per share, your shares would
then be sold at the next best available price that is $50
per share or higher.
The main benefit of a Sell Limit Order is that you may
be able to sell the shares that you own at a minimum price
that you specify IF the stock's price raises to that price.
Sell Limit Orders are great for maximizing profit-taking.
But, if the stock's price reaches your limit price, but
then changes direction to the downside before your order
is filled, you will still own your shares. Also, if the
price never reaches your limit price, you again will still
own those shares.