Difference between buy/sell stops & buy/sell limits

Hi everyone, I have been doing some reading on this and still dont quite understand the concept. I understand the buy/sell stop but I am still a little lost on the the buy/sell limits.

What is stopping someone from placing a sell stop at a high where you think it will retrace instead of a sell limit?

What are the differences?

thanks

It's actually really simple. A buy limit order would be an order to buy the market at a price below the current price. A buy stop order would be an order to buy the market at a price above the current price.

It's just the inverse with sell orders.

A sell limit order would be an order to sell the market at a price above the current price. A sell stop order would be an order to sell the market at a price below the current price.

That's all there is to it.

thanks for the reply. can't you use a sell stop instead of a sell limit to enter the market?

If you're sitting at the screen and press the sell button to execute immediately, that's a market order (short for at market). Stop and limit orders don't get executed straight away - the market has to reach those specified prices first.

You can on GFT and I would imagine on most others.
Of course, as been explained above ,your selling at a point below the present market.

Maybe this will help

thanks for the replies. smjones, in your chart, couldn't u use a sell stop instead of a sell limit? I am trying to find out why they are separate. If i want to sell at a higher price, can't I use a sell stop so that when the market goes up in my direction, it will trigger the sell stop with all the S/L & T/P info? I am sorry but I am still confused. I can understand that they are supposed to be used in various directions but I can see the advantage of using a sell over a limit etc.

If you want to sell at a higher price it would be a limit sell order, by definition. Any sell order above the current price is a limit order, because that's the definition of a limit sell order. Any sell order below the current price is a stop sell order. And the reverse for buy stop/limit orders.

Hope this helps.

I think trying to actually execute it in MT4 has shown me the visualization of what you guys are talking about. I am still unclear about something tho. With the sell limit, how is it executed? Does price have to be moving in your direction or does it just have to hit the price you have specified?

thanks.

In either case, orders are triggered as soon as the price is hit.

For stop orders, price would be moving in the same direction, and for limit orders it would be moving "against" the direction, hitting the price and hopefully reversing direction.

Hi there,

Have a look at this video. It it very well explained in 3 min (faure explained it perfectly actually)



Hope this helps

Pending Orders

Buy Stop = Going LONG once price comes UP to hit the entry
Buy Limit = Going LONG once price comes DOWN to hit the entry price
Sell Stop = Going SHORT once price comes DOWN to hit the entry
Sell Limit = Going SHORT once price comes UP to hit the entry price

Lots of nice answers.

I like to think of it in terms of breakouts.

All STOP orders are breakouts. In other words, you are going to buy or sell in that specific direction if the price keeps going in that direction.

If price is at 100, and you think it will go down, you could put a SELL STOP at 99. That means, if the price goes down to 99, you place a SELL order.
If price is at 100, and you think it will go up, you could put a BUY STOP at 101. That means, it the price goes up to 101, you place a BUY order.

STOP ORDERS = TRADING WITH THE DIRECTION OF PRICE.

Limit orders are different.

If price is at 100, and you want to buy it BUT YOU THINK IT WILL GO DOWN SOME MORE, you place a BUY LIMIT at 99. Now, you BUY once it goes DOWN to 99.
If price is at 100, and you want to sell it BUT YOU THINK IT WILL GO UP SOME MORE, you place a SELL LIMIT at 101. Now, you SELL once it goes UP to 101.

LIMIT ORDERS = TRADING AGAINST THE DIRECTION OF PRICE.

Or just trade with Oanda and let orders be orders and that's it.

simple answers are usually the best ..............though you can take a simple answer and extrapolote it to the extent that you have to rub your head and say............what the?

thanks guys, really useful answers. I'm a newbie and use stop loss and tp at the moment only, but i would like to practise in setting different types of orders.

i use this lol

you will never forget

I don't to copy all text here, but you may see the all information about it on mt5.com: MetaTrader 5 Help → Trading → Common Principles → Types of Orders → Types of Orders
Here is the pic also:

Have also been searching for clearer explanations on this and finally found it here!

I am trying to understand the mechanics of the stop order better though.

I get the limit orders and that they are as follows:

BUY LIMIT => fill at ASK price you set
SELL LIMIT => fill at BID price you set

But with stop orders, is this how they work:

BUY STOP => fill at market ASK price once the BID price you set is reached?
SELL STOP => fill at market BID price once the ASK price you set is reached?

Confused on this because my limit orders have been executing perfectly. But with my stop orders, one recent example was:

SELL STOP G/N 2.3784 got executed at 2.37808 (which I believe was the BID when ASK was 2.3784). Is this how it works out though? I assumed once the BID reached 2.3784 my order should have gotten executed...