A Sell Stop Limit Order is an order that combines the features
of a Sell
Stop Order with those of a limit order. A Sell Stop
Limit Order will be executed at a specified price (or above)
after a given stop price has been reached.
Once the stop price is reached, the order becomes a Sell
Limit Order, filled at the limit price specified or
Example: Suppose you own 100 shares of Bank of
America (BAC) and you are looking to sell them if the stock's
price falls a bit lower. Assume BAC is currently trading
at $45 per share. You place a Sell Stop Limit Order for
$41 on BAC, with a Limit (minimum you're willing to accept)
Suppose BAC then proceeds to trade down to $41.
At that time, your order would become a Sell Limit Order
and your order would be filled at the next best available
price as long as the stock still trades above your specified
limit price of $40.
The main benefit of a Sell Stop Limit Order is that you
have some control over when your sell order will be filled
and you have set a minimum price you are willing to accept
to sell your shares.
As with all limit orders, there is no guarantee that your
order will be filled. If the stock price does not reach
your stop price, you will not be filled. In addition, if
the price hits your stop price, but then trades below your
limit price, you will not be filled.