A stop-limit order is a conditional instruction that triggers a limit order when a specified stop (trigger) price is reached, allowing precise entry or exit control without guaranteed execution. This tool is widely used in futures and equities markets to constrain execution prices while awaiting a particular price movement. Traders rely on stop-limit orders to manage risk, capture breakout moves, or avoid adverse fills during volatile sessions. Execution occurs only if market prices first touch the stop level and then trade at or better than the specified limit price. Below, the term is examined technically and practically for futures traders, with contract-level notes, comparative context against other order types, and operational examples relevant to 2025 market structure and electronic trading platforms.
Definition
Stop limit order: a conditional trade that becomes a limit order when a specified stop price is reached, combining a trigger and an execution cap.
- Key terms: stop price, limit price, trigger, execution cap.
What is a Stop limit order?
A stop limit order is a two-part order type that first watches for a pre-defined trigger price and then posts a limit order to the market when that trigger is reached. In futures trading, it enables traders to specify both the activation point (stop) and the worst acceptable execution price (limit), thereby separating the decision to trade from the acceptable price range. This duality distinguishes it from plain stop-loss orders—which typically turn into market orders—and standard limit orders that are active immediately without an activation trigger. Stop-limit orders operate across exchange-traded futures, commodity contracts, and equity futures instruments, and are supported by electronic platforms such as Interactive Brokers, Charles Schwab, and TradeStation.
Because the order converts to a limit rather than a market order, execution is not guaranteed; if price moves past the limit without trading at or better than it, the order can remain unfilled. This design is useful when avoiding poor fills during gaps or fast markets is a priority. The mechanism works the same for buy and sell instructions but the placement of stop and limit values differs depending on whether the trader is initiating a breakout entry or a protective exit.
- Commonly used on electronic order books and CME Globex-style platforms.
- Favored by traders who prioritize price control over execution certainty.
Key Features of Stop limit order
- Dual-Price Structure: Requires both a stop (trigger) and a limit price, set independently.
- Conditional Activation: Remains passive until the stop price is reached; only then does it post a limit order to the book.
- Non-Guaranteed Fill: Execution occurs only if counterparties trade at or within the limit price—no fill if price gaps beyond the limit.
- Applies to Buy or Sell: Stop is set above market for buy stop-limit entries, below market for sell stop-limit exits (protective or short-cover scenarios).
- Compatibility with Time-In-Force: Can be combined with GTC or day orders; platforms often support GTC flags for persistence.
- Margin Interaction: Triggers may affect margin requirements on futures accounts due to potential position changes.
- Slippage Control: Reduces the risk of unfavorable fills versus stop-market orders but increases the chance of non-execution.
| Feature | Implication for Futures Traders |
|---|---|
| Stop Price | Activation level on the price ladder; must be precise for volatile contracts. |
| Limit Price | Defines worst acceptable execution; can be set equal to or better than stop. |
| Time-In-Force | Day, GTC, IOC options affect persistence and cancellation behavior. |
| Order Visibility | Limit posts to book only after trigger; pre-trigger order is not visible. |
How Stop limit order Works
Mechanically, a stop-limit order is stored by the broker or exchange as a conditional instruction until the stop price is observed on the market feed. Once a trade or quote hits the stop level—according to the platform’s definition (trade or quote trigger)—the system creates a limit order at the specified limit price. That limit order then sits on the order book and executes only if matching liquidity appears at or better than the limit. Margin and position effects depend on whether the limit executes: platforms update margin requirements immediately if the order is deemed likely to change net exposure, or upon fill for many retail setups (e.g., Fidelity, TD Ameritrade).
Example: A trader holds a long position in an E-mini S&P contract trading at 5600 and wants downside protection but refuses a market sale below 5585. They set a stop at 5590 and a limit at 5585. If the market trades 5590, a sell limit at 5585 posts; the position will only be sold if bids reach 5585 or higher. If the market gaps to 5575 without executing at or above 5585, the limit remains unfilled and the trader retains the position.
- Trigger mechanism: trade-based triggers are more conservative than quote-based triggers for some exchanges.
- Settlement impact: for futures, execution affects daily settlement prices; refer to the settlement price rules on your exchange.
- Example platforms: orders may behave slightly differently on Robinhood, WeBull, Merrill Edge, and institutional providers.
Simulateur d’ordre stop-limit
Simulez le déclenchement et l’exécution d’un ordre stop-limit. Modifiez le prix courant, le stop, la limite, la taille du contrat et la valeur par tick pour estimer les expositions et les scénarios de remplissage.