Stop-limit sell order 

 Stop-limit sell order 

A stop-limit sell order is a terrific strategic instrument that allows you to specify exact selling conditions while maximising gains and reducing losses. These orders are a smart approach to managing market volatility since they automatically switch to limit orders when your pre-determined price has been met. The secret to a shrewd trader’s success is using stop-limit sell orders effectively to maintain control, reduce risks, and maximise your selling strategy. 

What is a stop-limit order? 

Investors can effectively control their stock positions by using a strategic instrument called a “stop-limit sell order” in trading. Combining a stop order with a limit order, this order type enables traders to specify a predetermined selling price that will be activated when a given trigger price is achieved.   

Investors may automatically lock in profits or reduce losses with this proactive method, giving them more control and accuracy over their trading strategy. Traders manage risk and return in ever-changing financial environments by navigating the market with a customised exit strategy when using stop-limit sell orders. It’s a clever move for anyone looking for a structured, automated sales process. 

Understanding stop-limit order 

Consisting of two key components, the “stop” and the “limit,” stop-limit order combines features of market and limit orders.  

The order is triggered when the market hits or surpasses the trigger price specified by the “stop”. When the order is activated, it becomes a “limit” order, indicating the highest or lowest price the trader is prepared to purchase or sell at. 

Control over entry and exit points is facilitated by this dual framework, which is essential for minimising losses and securing profits. It’s crucial to remember that the stop-limit order cannot be triggered in a fast-moving market if the limit price isn’t achieved, which might expose the trader to volatile prices.  

Thus, careful evaluation of risk tolerance and a thorough grasp of market dynamics are essential for successful usage. 

Working of a stop-limit order 

As we discussed, stop-limit orders combine the features of a stop order and a limit order to control stock or cryptocurrency trades.  

Let us understand the working of a stop limit order by looking at the following example: 

Suppose you would want to purchase shares of company XYZ, which are now selling for US$ 100 per share. Intending to make a profit if the price rises to US$ 150, you choose to execute a stop-limit order as follows: 

  • Set a stop price of US$150 to indicate when the order becomes active and ready for execution. 
  • Set a limit price of US$160, indicating the maximum amount you are prepared to pay for the stock. 

The stop-limit order will only be executed upon activation if an individual is prepared to sell their ABC shares for US$160 or less. But the order could remain unexecuted if the stock price rises beyond US$160 without a fill. Under situations of a volatile market, traders may efficiently manage and control their transactions using this strategic strategy. 

Benefits of a stop-limit order 

As stop-limit orders provide investors enhanced control and the ability to choose specific exit points, they may be helpful in risk management. When the market moves against their positions, this shields them from suffering significant losses.  

Furthermore, once you submit a stop-limit order, it will be automatically executed when the stop price is reached. Traders who prefer a more passive trading technique or cannot monitor the market may find this helpful. 

Several trading methods can use stop-limit orders, including swing, position, and day trading. Not only can they be utilised for long positions, but they can also be employed to enter or exit a trade.  

Example of stop-limit order 

With a stop price of US$50 and a limit price of US$49.50, a trader may execute a stop-limit sell order for the stock.  

The order is triggered when the stock price falls to US$50, but it won’t go through until the price is US$49.50 or above. In volatile markets, traders can control when to enter and depart more accurately. 

Frequently Asked Questions

A stop order’s primary feature is that the trade is performed at market value if the price meets the stop price. Other key features include: 

  • The order becomes a limit order when the stop price triggers it. 
  • By automating trades based on predetermined standards and balancing the speed and price control requirements, the stop-limit order assists investors in navigating unpredictable markets. 
  • They are often used to automate purchasing or disposing of securities at specified levels while preserving price control, helping to minimise risk in volatile markets. 

Stop-limit orders give investors more control over their trades, which is one of their primary advantages. By only triggering the limit order when the set price level is achieved, the stop price helps guard against significant losses. This is especially advantageous when markets are volatile.  

However, stop-limit orders have some disadvantages as well. One among them is the possibility of missed opportunities. The order might not be executed, and the investor would lose out on possible gains if the stock price rose quickly over the price limit. 

Also, if you cannot find enough takers to satisfy your order, you will have a liquidity problem. Your order may execute less often the more conditions you start adding to it. 

Thus, to maximise the efficiency of stop-limit orders, traders must carefully evaluate the state of the market and price fluctuations. 

Stop-limit orders ensure the price, while stop-loss orders ensure execution. A stop-loss order is made to automatically sell an asset whenever its price drops below a specific limit, therefore minimising potential losses. On the other hand, a stop-limit order combines a stop order and a limit order. When the asset reaches a given price, it initiates a limit order to purchase or sell, but if the limit price fails to be met, there is no assurance of execution. 


Stop-loss orders can only be triggered within standard market hours. They will not be carried out during extended hours or on weekends and holidays when the market is closed. 

A stop-limit order must include the term of validity for either the current market or the futures markets when an investor places it. The order will expire after the trading session if it is not activated, for instance, if the investor selects a one-day validity period

    Read the Latest Market Journal

    Writing a Good Will: Avoiding Common Pitfalls (Part 2)

    Published on Jun 13, 2024 22 

    (This article doesn’t apply to foreigners nor our Muslim friends in Singapore.) Welcome to the...

    A Practitioner’s Perspective: Navigating Market Volatility, Uncertainty and Climate Change

    Published on Jun 12, 2024 70 

    In today’s dynamic financial landscape, investors face an array of challenges, including information overload, market...

    Investing in Tech Giants: Strategic Insights into Palantir, TSMC, and Microsoft

    Published on Jun 11, 2024 70 

    In the ever-evolving landscape of technology and data analytics, certain companies stand out for their...

    Weekly Updates 10/6/24 – 14/6/24

    Published on Jun 10, 2024 20 

    This weekly update is designed to help you stay informed and relate economic and company...

    Investing in Gold with Unit Trusts

    Published on Jun 7, 2024 119 

    When gold was first discovered about 4500 years ago, it was valued for its malleability...

    Weekly Updates 3/6/24 – 7/6/24

    Published on Jun 3, 2024 52 

    This weekly update is designed to help you stay informed and relate economic and company...

    World Environment Day – Investing in a greener future

    Published on May 31, 2024 120 

    What is it? World Environment Day is the UN’s largest global platform for environmental public...

    Water: Liquid investment opportunities

    Published on May 31, 2024 42 

    The Singapore International Water Week (SIWW) is a leading global platform for water industry professionals...

    Contact us to Open an Account

    Need Assistance? Share your Details and we’ll get back to you


    This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

    An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

    Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

    Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

    The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <> for more information in relation to the dividend distributions.  

    The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

    The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

    This advertisement has not been reviewed by the Monetary Authority of Singapore.  


    Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
    250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
    Tel: (65) 6230 8133 Fax: (65) 65383066