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An order that combines the features of a Buy Stop Order with those of a limit order. A Buy Stop Limit Order will be executed at a specified price (or lower) after a given stop price has been reached.

Once the stop price is reached, the order becomes a Buy Limit Order, filled at the limit price specified or lower.

Example: Suppose you are looking to buy 100 shares of SP-500 (SPY) if the stock's price shows some upward momentum. Assume SPY is currently trading at $122 per share. You place a Buy Stop Limit Order for $122 on SPY, with a Limit (maximum you're willing to pay) at $122.50.

Suppose SPY then proceeds to trade up to $122. At that time, your order would become a Buy Limit Order and your order would be filled as long as the stock still trades below your specified limit price of $122.50.

The main benefit of a Buy Stop Limit Order is that you have control over when your order is filled and you have set a maximum price you are willing to pay.

As with all limit orders, there is no guarantee that your order will be filled. If the stock price does not reach your stop price, you will not be filled. In addition, if the price hits your stop price, but then trades above your limit price, you will not be filled.

Limit Price = the most we want to pay for the stock. Usually used when the last and low price trades above the Moving Average.
 

Buy "Limit Order" example:

Place buy order only if the ETFs trades above the the 20-day moving average. Use the High Closing Price to determine the Limit Order price.

In this example, the order was triggered the next day at the opening price which was lower than the limit price placed.

Questions & Answers

When NOT to buy? Even though the trend chart truly favors the stock, it's not a good time to buy if the stock trades below the 20-day moving average signals a down trend.

In what increments should I buy a positions? I like to buy equity positions in 2 increments, a core positions and a position trade on a dip and/or after having a profit. Fore more information on funding visit Portfolio Funding page.

Why should I use a limit orders instead of a market orders? market order are OK when trading when the stock market is open - it's easy to see the current price. But most of us put in orders the night before which should be controlled by limiting the purchase price. Let's say, the market opens really high and then shortly after it drops a few points, you would have set a limit of how much you're planning to pay for the stock.