Indices Stop Loss Order vs Limit Order Definition

Stop Loss Order Meaning

Stop Loss Order is a type of order that's set after opening a trade that's intended to cut losses if the trading market shifts against you.

Stop Loss Order is a pre-determined point of exiting a losing trade & it's meant to control losses in stock indices trading.

A indices stop loss (SL) order is an order placed with your broker that will automatically close your open trade when the price of your open trade order reaches a predetermined price. When set level is reached, your open trade transaction is liquidated.

These stop loss orders are designed to cap the sum of money which trader can lose: by exiting the trade if a specific price that's against the trade is reached.

For example, one may open a buy trade & put a stop loss of 20 pips, if the price moves against the trader by 20 pips the stop loss order will be filled and the trade will be liquidated therefore limiting the loss to 20 points (pips) - Indices Stop Loss Definition.

Limit Orders: Buy Limit Order vs Sell Limit Order

Limit order definition - Indices limit is an order to buy or sell at a certain price which is a retracement level where price is predicted to pull-back to before resuming the original Indices trend. traders use stock indices limit orders to buy or sell at better market price. Indices Buy Limit Order and Sell Limit Stock Order - types of limit orders are available in most online trading platforms, such as MetaTrader 4 platform.

Buy Limit Order and Sell Limit Stock Order - A order of this type can be used to buy below the trading market level (up-ward trend retracement) or sell above trading market level (downwards trend retracement).

Buy limit Order - When buying, your buy limit is executed when the trading market falls to your set price. (retraces down) - buy limit order set below market price

Sell limit Order - When selling, your sell limit is executed when the trading market rises to your set price. (retraces up) - sell limit order set above market price

Limit orders are placed by traders when they expect price to bounce back after reaching this set level.

• Buy Limit Order buy at a level below the current market level.

• Sell Limit Order sell at a level above the current market level.

Buy Limit Stock Order Example

In the buy limit trading order example explained and illustrated below, the buy limit order was placed to buy at a price below the current stock market price. Point B is point at which it was set.

How to Use Indices Limit Buy Orders - Limit Order Buy Example

The price then retraced and went down to hit the buy limit order, & afterward the price continued to move upward in direction of the original Indices upward trend. When the limit buy order was hit it changed to a buy order - How to Use Indices Limit Buy Orders.

Price Hits Buy Limit Order, Limit Buy Order Now Changes to a Buy Order - How to Use Buy Limit Orders

Sell Limit Order Example

In the sell limit trading order example explained and illustrated below a the sell stock indices limit order was set to sell at a price above the current stock market price. This is the level for the price retracement.

How to Use Indices Limit Sell Orders - Limit Order Sell

The price then rallied, went up to hit the sell stock indices limit order, & afterward the price continued to move downward in direction of the original indices downward trend.

How to Use Sell Limit Orders

When the price hit the set sell limit order level the order changed to a sell order, this is therefore a good technique to sell at a better price after a retracement.