Stop-Limit Orders
Chapters in this video
- 0:00 The stop-limit as the plain stop's evil twin: same placement, different outcome
- 1:14 Mechanical flow: rest, trigger, then become a limit order
- 2:20 Trey the Trader and the gap-risk nightmare scenario
- 3:27 Head-to-head trade-off: guaranteed fill vs. guaranteed price
- 4:02 Placement rule and why "limit" does not flip buy/sell location
- 4:53 Exam trap phrasing: "protection from a bad price but might not get filled"
- 5:38 Rapid-fire exam recap
What this video covers
- The mechanical three-step flow of a stop-limit order: dormant rest, trigger at or through the stop price, then transformation into a limit order (not a market order)
- How the stop-limit trade-off flips from a plain stop: it guarantees a price (or better) instead of a fill, accepting the risk of no execution at all
- Why gap risk leaves a position completely exposed when the market blows past the limit in a fast, one-sided move
- Why placement of a buy stop-limit is always above the market and a sell stop-limit is always below the market, identical to a plain stop despite the "limit" in the name
- How to spot exam language that signals stop-limit: "protection from a bad price but might not get filled" or any phrasing stressing guaranteed price over guaranteed execution
- Why a stop-limit does NOT always protect a position, since its protection vanishes exactly when the market moves fastest and gaps through the limit
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