Sell Limit vs Sell Stop Market Orders

Today I am going to assess the issue of sell limit vs sell stop.

Sell limit and sell stop are among the tools a forex trader can utilize to achieve success in the forex market.

Forex traders are not directly involved in the forex market. They only own their accounts and initiate actions concerning what they intend to trade and how they wish to trade it but with a forex broker.

The forex broker, in return, receives “requests” or “orders” from the trader on what to do on the trader’s account and finally continues to make actual changes as intended by the trader.

The forex order is one forex trading tool that a forex trader uses to communicate with his or her broker. These tools are many, but in this article, I am going to focus on limit order and sell order; more precisely sell limit vs sell stop.


sell stop vs sell limit

Limit Entry Order

A limit entry is an order that is normally placed to either sell above the market or buy below the market at a specific price.

For instance, AUDUSD at the moment of trading the price might be at 1.3160. You may consider going short once the price reaches 1.3180.

You do have a choice to sit in front of your PC, waiting for it to reach 1.3180 level. Upon reaching 1.3180, you proceed to select a sell market order.

Sitting in front of your PC, waiting for a trade to reach a certain price level can be tedious. It also results in the development of varied emotions.

So alternatively, you can set a sell limit order at 1.3180, meaning you do not have to stay in front of your PC waiting. When the price moves up to 1.3180, your trading platform will execute a sell order automatically at your preferred price level.

This type of entry order is used when only you are fully convinced that the market will change its direction upon reaching the price that you projected.

A limit order to purchase at a price below the existing market price will be issued at a price similar to or less than the stated price.

A limit order to sell at a price beyond the current market price will be given at a price similar to or more than the stated price.

Stop Entry Order

A stop entry order, on the other hand, is one that an order is placed to sell below the market or buy above the market at a specified price.

In an example, CADCHF is at the moment trading at 1.6270 and is moving in an upward direction.

If you believe that price will keep moving in this direction once it gets to 1.6285, you can either stare at your PC and execute the trade manually upon reaching that price level or set a stop entry order.

I hope you can see how sell limit vs sell stop orders differ.

What is Stop Limit Order

A stop limit order is a blend of a stop order and a limit order.

When a stop limit order reaches a certain stop price, the order changes to limit order, and an asset is sold or bought at a certain price or at an even better price.

Such orders have a similarity with stop on quote and stop limit on quote orders. These order types are most appropriate for traders that prefer making trades that have components of both limit orders and stop orders.

Why are Stop and Limit Orders so Useful?

It is essential to apply limit orders and stop orders as a risk management tool.

This minimizes the need for a trader to enter his account every day and keep track of his positions.

Stop orders and limit orders will be of so much use once there are key market events that can take place instantly.

These events tend to take traders by surprise most of the time. Nevertheless, having your trades well secured and in check will either close your trade position in case the event turns you trade to the worst or lock in your set profit.


What is the difference between Sell Limit and Sell Stop?

Sell Limit vs Sell Stop 

Sell Limit is a sell pending order that is placed above the prevailing market price.

For instance, the EURUSD price at the moment is 1.0495. As a trader, you want to sell EUR/USD when the price moves higher and gets to 1.0515. You, therefore, have to set a sell limit order at 1.0515.

On the other hand, when you place a sell pending order below the prevailing market price, such an order is referred to as “Sell Stop.”

For instance, EURUSD’s current price is 1.0495. And, you intend to sell EUR/USD when the price goes lower and gets to 1.0480. You, therefore, have to set a sell stop order at 1.0480.

How to Set a Sell Stop and Sell Limit Orders

This explains how to set up sell limit vs sell stop on the MT4.

You begin by pressing F9 on your PC and then changing the first field labeled ‘Type’ where it is usually set as “instant execution” and change it to “pending order.”

In the second field labeled “Type,” on the section labelled number 3 on the image above, you have to select a Sell Limit order type if you wish to sell once the price gets to a higher level.

sell limit order

In a similar way, you need to choose a Sell Stop order type if you want to sell when the price hits a lower level.

In this, you have another difference that is the pending order price.

If there is a Sell Limit, the price you enter must be higher compared to the prevailing market price.

In the event of a Sell Stop, the price must be lower than the prevailing market price.

If you happen to enter the price incorrectly, you will receive an “Invalid S/L” or “Invalid T/P” error.

sell stop order


Sell Limit vs Sell Stop Execution of Correct Orders

When dealing with sell limit vs sell stop, you have to ensure that at all times you execute the correct order as per your desire during that time.

Having a solid understanding of the various types of orders will help you to use the correct tools to accomplish your desires, the way you wish to enter the market; to either trade or fade and the nature in which you are going to exit the market with either a profit or a loss.

Even as there could be other types of orders, the stop and limit orders are among the most popular coupled with the market order.

You ought to be okay using them since wrong execution of orders could easily cost your trading account. That is why it is important to understand the sell limit vs sell stop proponents.

Leave a Comment