Wealthy Living

Trading Risk Management: Stop Loss vs Stop Limit

For both investors and swing traders, it’s vital the difference between stop loss vs stop limit orders is understood.

They’re both order types that form a critical part of our trading risk management. At their cores, swing trading and investing are the risk of a unit of money in return for a multiple of that unit.

Therefore as swing traders, we should know exactly how much we are prepared to lose on a single trade and that we can express this as a specific price at which we will exit our position.

This principle works whatever instrument we’re trading especially including volatile cryptocurrencies.

What’s the Difference Between a Stop Loss vs Stop Limit Order?

Stop Loss Order

A stop-loss, or stop order, is an instruction to a broker, placed on entry to a trade. The order will be to buy or sell a position at a particular price.

So, let’s assume we are bullish and want to be long stock (or whichever instrument we’re swing trading.

Stop Limit Order

Placing a stop-limit order, by contrast, means that an order is triggered only if the stop price is met and which if happens, will execute a limit order.

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