What are the benefits of a limit order?

The biggest advantage of the limit order is that you get to name your price, and if the stock reaches that price, the order will probably be filled. Sometimes the broker will even fill your order at a better price.

What is the advantage of a stop limit order?

The primary benefit of a stop-limit order is that the trader has precise control over when the order should be filled. The downside, as with all limit orders, is that the trade is not guaranteed to be executed if the stock/commodity does not reach the stop price during the specified time period.

What will happen if the market gaps through the price you have set?

If the market price suddenly gaps down or up, at a price beyond your stop level, it is possible your position will be closed at the next available price which can be a different price than the one you have set. This is known as ‘Slippage’.

What is a stop gap order?

Stop-loss orders and limit orders are two ways to protect yourself from losses that occur as a result of gaps. Stop-loss orders mean a broker will buy or sell a security when it reaches a specific price, limiting how much an investor might lose on a position.

What is the key advantage of a limit order quizlet?

D) The key advantage of a limit order is that there is no guarantee that it will be executed at all; the designated price may simply not be obtainable.

Why do gaps get filled?

Exhaustion gaps are typically the most likely to be filled because they signal the end of a price trend, while continuation and breakaway gaps are significantly less likely to be filled since they are used to confirm the direction of the current trend.

What happens if the market opens below stop loss?

When a stock falls below the stop price the order becomes a market order and it executes at the next available price. Although most investors associate a stop-loss order with a long position, it can also protect a short position, in which case the security gets bought if it trades above a defined price.

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