In B+ Basics, we recommended using either a Limit or a Market Order as your Entry Order type. However, two additional options exist: Stop Limit and Stop Market Orders. This guide explores these advanced Entry Order strategies for One-Click Order Templates and Custom Trading Strategies.
Stop Limit Orders Explained
A Stop Limit Order combines features of a stop order and a limit order. Once the Stop Price is reached, it converts into a Limit Order, executing at a specified price or better.
To configure a Stop Limit Order:
- Right-click in the Strategies Tab of Brokerage Plus.
- Select New/Edit Trading Strategy.
- Navigate to the Entry Order Section under the Order Details Tab.
Key Components
- Stop Price: Trigger price for the order.
- Limit Price: Execution price (or better) after the stop is hit.
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Stop Market Orders Explained
A Stop Market Order becomes a Market Order once the Stop Price is reached. Unlike limit orders, it guarantees execution but not price.
When to Use Stop Market Orders
- Fast-moving markets where immediate execution is prioritized.
- Avoiding missed entries/exits due to price gaps.
Configuring Stop Orders
Stop Formula
Define the Stop Price using:
- Trade Ideas Filters (e.g., Today’s High/Low).
- Custom Formulas (must output static dollar/percentage values).
Note: Orders cannot rely on dynamic values (e.g., moving averages).
Limit Reference (for Stop Limit Orders)
Choose between:
- Last Price: Uses current stock price.
- Custom Formula: Defines a static limit price.
Limit Offset: Adjusts aggressiveness:
- Negative Offset: Pays slightly more (prioritizes fills).
- Positive Offset: Waits for better prices (lower fill probability).
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Practical Examples
As Entry Orders
| Position | Order Type | Filter | Application | Result |
|--------------|----------------|---------------------|-----------------------|-----------------------|
| Long | Stop Limit | Today’s High: $8 | Stop at $8 | Limit activates at $8 |
| Short | Stop Limit | Today’s Low: $5 | Stop at $5 | Limit activates at $5 |
As Exit Orders
| Position | Order Type | Exit Type | Filter | Result |
|--------------|----------------|--------------------|---------------------|-----------------------|
| Long | Limit | Target | Today’s High: $8 | Target: $14 |
| Short | Stop Market | Stop Loss | Today’s High: $12 | Stop Loss: $18 |
FAQs
1. What’s the difference between Stop Limit and Stop Market Orders?
- Stop Limit: Becomes a limit order after the stop price is hit (price-controlled).
- Stop Market: Converts to a market order (guaranteed execution, no price control).
2. Can I use dynamic values for Stop Prices?
No. Filters must output static values (e.g., fixed dollar amounts).
3. How does Limit Offset affect order execution?
- Negative Offset: Increases fill likelihood but sacrifices price precision.
- Positive Offset: Prioritizes price over execution speed.
4. Are these orders suitable for fast-moving stocks?
Stop Market Orders are ideal for volatile markets due to immediate execution.
Final Tips
- Use Stop Limit Orders for price-sensitive strategies.
- Opt for Stop Market Orders in high-volatility scenarios.
- Always backtest filters/formulas before live trading.