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Hi this is Shaun Overton with OneStepRemoved.com in this video we are going to
discuss the difference between a stop and a limit order this video came about
we often get expert advisor request that use pending entries and a lot of clients mix up
the difference between a stop entry and a limit entry so we wanted to make this
video to clarify the difference a stop order doesn’t mean anything more than an
order at a price worse than the current market and its counterpart a limit order
is an order to do something at a price better than the current market where most
people gets mixed up is in the context of entering the market versus exiting the
market so if you look at the market from a buy or long prospective for entering
you want to buy when the price goes up that means it’s worse than the current market
so you would use a stop entry and if you are wanting to buy when the price goes
down you would want to use a limit buy entry working in reverse to enter the market
and sell if you want to enter the market and sell at a price better than the current market
you use a limit order and expect the price to rise before it falls
and if you want to enter on a breakout where the market suddenly dips and then you sell
you would use a stop entry to sell now working from the opposite side of the equation
once you enter the market you will notice the green and red boxes flip around
once you have already brought and the price goes up you are looking at limits
and then you have your stop loss where if the price goes down you lose
money and you exit and then again shorts work in the opposite direction where if
the price goes up you are losing money and if the price goes down you are making
money and you want to limit out so if you compare this graph here where you see the
entry orders and exit orders you will notice that the limit is always context of
being better than the current market and a stop order is always in the context of being worse in the current market
If you have any questions you can find us at
www.OneStepRemoved.com
My name is Shaun Overton, Thank You for listening.