Stop-limit order

A stop-limit order combines a stop order and a limit order. When the market reaches the stop price, the platform does not send a market order; it places a limit order at the price you specified. That limit order fills only at the limit price or better.

On MetaTrader 5 these appear as "Buy Stop Limit" and "Sell Stop Limit". MetaTrader 4 does not offer them, and other platforms and brokers vary.

Example

Illustrative figures: EUR/USD is at 1.0880. You want to buy a breakout above 1.0920 but not pay more than 1.0925.

• You place a buy stop-limit with a stop price of 1.0920 and a limit price of 1.0925.
• If the ask rises to 1.0920, a buy limit at 1.0925 is placed. If the ask is still at or below 1.0925, it fills.
• If a news release makes the price jump from 1.0918 straight to 1.0935, the limit order sits unfilled at 1.0925 unless the price comes back down.

Compare a plain buy stop at 1.0920: it would have filled around 1.0935, with 15 pips of slippage, but you would be in the trade.

The trade-off

• Benefit: you control the worst price you pay, which limits slippage on entries.
• Cost: in exactly the fast markets where slippage is worst, the order may not fill at all.

That trade-off makes stop-limits a poor choice for protective exits. A stop-loss that does not fill during a sharp move leaves the position open and the loss growing. For exits, most traders accept the slippage risk of a normal stop, or use a guaranteed stop-loss where available. Our guide to order types sets out every option.