Stop Loss vs Stop Limit - What's the difference between them?
Some people may see stop-loss orders and stop-limit orders as one and the same. They’re not; there are some very subtle but very important differences. With a stop-loss order, when the contract price hits that level, a trade is triggered and executed at the prevailing market price. A stop-limit order is a two-stage affair with the initial price activating a stop-limit order and a second (minimum) price limit, allowing traders a degree of control over the actual transaction price. This ensures that in fast-moving markets, or sharp movements in contract prices on the open, investors are not committed to a sale at any price. Let us look at how this works in practice.
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0:00 Music Intro
0:13 Intro
1:29 Two types of stop-loss
2:33 Sell stop example
5:25 Buy stop example
7:40 Basic differences
8:47 Stop-limit orders
10:09 Which one should you use?
12:04 Advantages
12:30 Drawbacks
13:25 F.A.Q.’s
14:30 Final thoughts