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What is a stop-limit order?
A stop-limit order combines two prices: a stop price that activates the order and a limit price that sets the worst price you will accept. When the stop is reached it becomes a limit order rather than a market order, so it may not fill at all.
What it means for you
A stop-limit protects you from a terrible fill but not from a falling price. If the market drops straight through your limit, the order sits unfilled and you still hold the asset as it falls. Choosing the gap between the stop and the limit is the real decision.
How it works
The stop and limit prices need not be the same. In an SEC example, a sell stop-limit with a stop at 3.00 and a limit at 2.50 becomes an active limit order when the market reaches 3.00, but can then only execute at 2.50 or better. Like any limit order, it may never execute if the price moves away from the limit. Like a stop order, a short-lived intraday swing can trigger it, and firms differ on whether last-sale prices or quotes count as reaching the stop.
An example
Say you hold a coin at $100 and place a sell stop-limit with a stop at $90 and a limit at $88. A drop to $90 activates it. If the price falls to $85 before buyers appear at $88 or better, nothing sells and you are still holding at $85.
Sources: SEC Investor Bulletin: Stop, Stop-Limit, and Trailing Stop Orders, FINRA: Stop Orders: Factors to Consider During Volatile Markets, CFTC Glossary · checked 4 October 2026
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Educational content, not financial advice. Written by hand and checked against the source named above. Something wrong? Tell us and we reply within two business days.