
Buy Limit vs. Sell Stop Order: An Overview
Most of the time, advanced traders use trade order entries for more than just buy and sell market orders. When you buy or sell at the market price, your trade will usually go through, but there may be slippage. Slippage is the amount you give up to the market’s supply and demand directions when you make a basic buy or sell market order.

Brokerage systems also have advanced order types that let traders choose the prices they want to buy or sell at in the market. With these advanced orders, slippage can be avoided and a trade can be made at the exact price if and when the market reaches that price within the time specified. Traders can use a number of different advanced orders to set up trades with certain parameters. Each trading platform for a brokerage will have its own trade order options, so it’s important to know what each one has to offer.
In a brokerage system, market, limit, stop, stop limit, and trailing stop are five of the most common trading order types. Here, we’ll talk about a stop order to sell and a limit order to buy.
Buy/Sell Stops & Buy/Sell Limit
- Most trading platforms for brokerages let you place five different kinds of orders: market, limit, stop, stop limit, and trailing stop.
- A limit order to buy at a certain price is called a “buy limit order.”
- A sell stop order is a stop order to sell at a market price after a stop price has been reached.
- Buy Limit Order
- Both buy limit orders and sell limit orders let a trader choose their own price instead of taking the market price at the time the order is placed. Traders can set the exact price at which they want to buy shares by using a limit order for a buy. Most of the time, this price is a calculated starting point.
There are a few important things to think about when making a buy limit order. With a buy limit order, the brokerage platform will buy the stock at the price you set or a lower price if it comes up in the market. A limit order does not always get filled. It won’t work if the market price never reaches the level you set. Since limit orders can take longer to carry out, the trader may want to give the order a longer time to be open. Many trading systems set the default trade timeframe to one trading day, but traders can choose to make it longer if the brokerage platform gives them the option.
When a trader wants to buy securities at a certain price, he or she can use a “buy limit order.” A trader who uses margin would still place a buy limit order for the price they want to buy at.

Sell Stop Order
A stop order that is used when selling is called a “sell stop order.” It is very different from a limit order because it has a stop price that makes a market order become valid.
Sell stop orders have a price that they will stop at. In the case of a sell stop order, a trader would set a stop price to sell. If the market price of the stock goes up to the stop price, a market order to sell is sent out. Stop orders are different from limit orders because there is usually a small difference between the stop price and the next market price execution. This is called slippage.
Most trading platforms only let you start a stop order if the stop price is below the current market price for a sale and above the current market price for a buy. Because of this, stop orders are usually used in margin trading and hedging strategies that are more advanced.
When you use margin, you can set a sell stop to start a short sale. When the trader already owns the stock, a sell stop is often used to limit losses or keep track of profits.
A trader bought a stock for $35 per share, but he or she doesn’t want to lose more than $5 per share on the trade. They put in a sell stop order just under $30 per share, maybe at $29.50. If the market price drops to $29.50, the sell stop order is triggered, and the trader’s stock is sold at the next available market price.
Differences to note
The main difference between a buy limit order and a sell stop order is the type of order. To understand these orders, you need to know how a limit order is different from a stop order. A limit order sets a price for an order and then makes the trade at that price. A buy limit order will be filled at or below the limit price. A sell limit order will be filled at or above the limit price. Overall, a limit order lets you say what price you want to pay.
A stop order has a specific parameter that tells the trade when to start. Once the price of a stock hits the stop price, the trade will be made at the next market price. Most of the time, a stop order is used for margin trading or hedging because it limits the price at which it can be filled. So, a buy stop must usually have a price above the current price of the market, and a sell stop must have a price below the current price of the market. When the buy stop price is reached, a buy stop order will be filled at the next available market price. A sell stop would be carried out at the next price on the market after the sell stop parameter was reached. Most of the time, a buy stop is used to close out a short position, while a sell stop is used to stop a loss.