Selling stocks, limit and stop?

Question

Can anyone tell me how to use limit and stop? Say I want to sell a stock for over 24, when its valued at 24.

What do I put in the field of limit, or what do I put in stop?

Answer 1

You should use a limit order to sell your stock at $24. The limit order means your order to sell is only valid at prices at $24 or higher. Thus, if the price falls below $24, your sell order will not be executed.

A stop loss order is used to limit your losses in a stock you already own. For example, if you owned a stock at $24 and were concerned about a price decline. If you put a stop loss order at $20, your stock would be sold automatically if the price fell to this level.

Answer 2

Limits also can be used when you want to buy a stock. It is a price that you will pay for it. Usually it is below the price where the stock currently is being traded (unless for some reason you want to pay more for the stock than what it is being currently traded).

Stops are used when you own a stock. You put a stop on at a lower price in case it starts to fall. You can then "stop out" if it hits that price - in effect you will sell no lower than that price. Stops are used for protection.

Answer 3

Stop orders are to sell stocks that you already own at a specific (below market) price. This is a safety mechanism, so your position will close out even if you're not watching the market and the market price drops to your stop-price. This order is not active until the price is triggered (so you won't immediately sell out at below market prices).

Limit orders buy/sell stocks at specific prices.

If you own stock, you could set a limit order to sell this stock at a higher price. If the stock rises to that level, it will sell the position.

Conversely, if you want to buy a stock that you do not own, you can set a limit order below market price and if the price dips to that level your order will be placed.

Make sure that if you have buy-limit orders outstanding that you can cover the cost of purchasing all of the orders if the overall market declines and sets off all of your orders at once.

Answer 4

Limit : you can able to limit the price.

Stop: Stop loss trigger price : You can able to fix the loss amount this amount should not greater or equal to the limit price.

A Stop loss order allows the client to place an order which gets activated only when the market price of the relevant security reaches or crosses a threshold price specified by the investor in the form of 'Stop Loss Trigger Price'. When a stop loss trigger price (SLTP) is specified in a limit order, the order becomes one which is conditional on the market price of the stock crossing the specified SLTP. The order remains passive (i.e. not eligible for execution) till the condition is satisfied. Once the last traded price of the stock reaches or surpasses the SLTP, the order becomes activated (i.e. eligible for execution by being taken up in the matching process of the exchange) and then on behaves like a normal limit order. It is used as a tool to limit the maximum loss on a position.

Examples :

Stop Loss Buy Order
'A' short sells Reliance shares at Rs 325 in expectation that the price will fall. However, in the event the price rises above his buy price 'A' would like to limit his losses. 'A' may place a limit buy order specifying a Stop loss trigger price of Rs 345 and a limit price of Rs 350. The stop loss trigger price (SLTP) has to be between the last traded price and the buy limit price. Once the market price of Reliance breaches the SLTP i.e. Rs 345, the order gets converted to a limit buy order at Rs 350.

Stop Loss Sell Order
'A' buys Reliance at Rs 325 in expectation that the price will rise. However, in the event the price falls, 'A' would like to limit his his losses. 'A' may place a limit sell order specifying a Stop loss trigger price of Rs 305 and a limit price of Rs 300. The stop loss trigger price has to be between the limit price and the last traded price at the time of placing the stop loss order. Once the last traded price touches or crosses Rs. 305, the order gets converted into a limit sell order at Rs. 300.

Important
Please note that in a buy order the SLTP cannot be less than the last traded price. This is treated as a normal order because the condition that the last traded price should exceed the stop loss trigger price for a buy order is already satisfied. Similary, in case of a stop loss sell order the SLTP should not be greater than the last traded price for the same reason.


• What are price bands?

The exchanges have fixed price bands for all t securities within which they can move within a day i.e +-20%. In case of scrips on which derivatives products are available there is a price freeze of +/-20%.Orders outside the minimum and the maximum of the range are not allowed to be entered into the system. However in case of few specific scrips, from time to time the exchange has fixed price band of less than +/-20%.The previous day's closing price is taken as the base price for calculating the price bands.

In case a member wants to execute a trade beyond +/-20% freeze (derivative scrips) then he will have to request the exchange to relax the price freeze for his particular order.

Answer 5

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Best Wishes && Good Luck!

Answer 6

you might want to check out "investopedia.com" ...it's pretty good about terminology and application