Limit Price (Conditional Orders)
A limit price allows you to nominate the price level that must be reached before your pre‑determined trading instruction is triggered. This helps you manage risk and execute trades according to your investment strategy.
For conditional orders, the trigger condition is automatically based on the last traded price of the security.
Selecting the Appropriate Condition
- Stop loss (to limit potential losses):
When submitting a sell conditional order as a stop loss, select “less than or equal to”. - Profit trigger (to lock in gains):
When submitting a sell conditional order to take profit, select “greater than or equal to”.
These selections ensure your order is activated appropriately when the market price reaches your chosen level.
Example: Using a Conditional Order as a Stop Loss
- You purchase shares of stock XYZ at $10.00 and wish to limit potential losses if the share price begins to decline.
- You place a conditional sell order with:
- A trigger price of $9.70, and
- A sell limit condition of “less than or equal to” $9.50.
- If the last traded price of XYZ reaches $9.70, the conditional order is triggered and a sell order is placed in the market, ensuring the shares are sold at no less than $9.50.
This approach helps cap your potential loss to $0.50 per share, providing greater control and discipline in managing your investment.