Lesson 4

Buying, selling, limits

Now, limit or stop

With a market order you buy at the current price. A limit sets your desired price: it only buys if the price falls to or below it, otherwise not at all.

Stop protects against losses

A stop order sells automatically as soon as the price reaches a threshold, at the next available price. If the price jumps down, for example overnight, the sale price can be well below the threshold. So a stop limits losses but does not guarantee a price.