# How to set a stop and limit?



## Bort (Mar 19, 2015)

Assuming this is an easy question...

Assume I purchase XYZ stock for $50/share on the TSX.

Once I buy XYZ, the stock rises to $60/share. 

I would like to then lock-in some of the gains by automatically having the stock sell if it hits $55/share, or if it hits $65/share. Basically I want to setup 2 stops for the stock to automatically sell. I'm a Questrade user (if it makes any difference). What type of sell order do I select? 

I've also read up a little bit on a "trailing stop", which will sell the stock if it falls to a certain price or %, and continually increases that bottom price as the stock rises? How do you set that up as well?

Thanks.


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## ThisGuyNelson (Jun 4, 2016)

A trailing stop is your best bet. It will maintain some of your returns following the price by a certain percentage. You have to go into a sell order to set it in questrade and I believe just select 'trailing stop'.


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## Bort (Mar 19, 2015)

Thanks, that's pretty much exactly what I was looking for.

What's the difference between a "Stop" and a "Stop Limit"? 

I'm normally a couch potato investor but I find myself dabbling in the odd stock when I believe it's oversold. Just trying to make sure I'm aware of my options to optimize my sell points!


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## fretwire (Apr 13, 2016)

A 'regular stop' or 'stop market' will turn your order into a market order once it hits the trigger but with a 'stop limit' you can specify the minimum you're willing to sell at.

For your XYZ example, trading at $60:

Stop at $55 will trigger a market order as soon as the price hits $55 or lower. If you get one of those ultra-volatile periods where it's trading at $58 on day 1 then on day 2 it opens at $48, your order turns into a market order and you'll sell at whatever the current bid is, which could be well below your trigger price.

With a 'stop limit' you can also set a $55 trigger but then specify the minimum you're willing to sell at is say $53. Then if it opens at $48 on day 2 your order won't turn into a market order because it's trading below your limit so you won't get stopped out.

If your stock is trading at $60 and you set a trailing stop with a $5 delta, your trigger will go up as/if the stock goes up. So if on T+1 it trades at $61 your stop trigger gets upped to $56 ($61 minus your $5 delta). Your stop goes up when the price goes up, then stays at the higher level when the price goes down, so with a $5 delta at $60 your stop will get upped to $56 if the stock gets to $61 but stay at $56 if the price then drops to $59. 

Be careful with stops though! I'm not sure if it's the market manipulators or just the freak show known as the 'stock market' but it often happens that the stock dips just low enough to stop you out, then runs back up.


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## BoringInvestor (Sep 12, 2013)

Bort said:


> Assuming this is an easy question...
> 
> Assume I purchase XYZ stock for $50/share on the TSX.
> 
> ...


Sounds like you want a bracket order.
It's available in IQ Edge: http://help.questrade.com/how-to/iq-edge/order-entry2/bracket-orders#.V1l1rbsrK70


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