Stop On Quote Vs Stop Limit On Quote Etrade
Introduction
When trading stocks, it is essential to understand the different types of orders that are available to help you achieve your investment goals. One of the most common types of orders is the Stop On Quote order, which is used to protect your investments against potential losses.
Another type of order that is similar to the Stop On Quote order is the Stop Limit On Quote order. Etrade is one of the most popular online brokers that offer these two types of orders to its clients.
What is a Stop On Quote Order?
A Stop On Quote order is an order that is placed to sell a stock when the stock reaches a specific price. This type of order is used to protect your investment against potential losses by selling the stock at a predetermined price.
For example, let's say you have purchased a stock at $50 per share, and you want to protect your investment against potential losses. You can place a Stop On Quote order at $45 per share, which means that if the stock falls to $45 per share, your shares will be sold automatically.
What is a Stop Limit On Quote Order?
A Stop Limit On Quote order is similar to a Stop On Quote order, but it has an additional limit price. This type of order is used to sell a stock when the stock reaches a specific price, but it also has a limit on the price that the stock can be sold for.
For example, let's say you have purchased a stock at $50 per share, and you want to protect your investment against potential losses. You can place a Stop Limit On Quote order at $45 per share with a limit of $40 per share, which means that if the stock falls to $45 per share, your shares will be sold automatically, but not for less than $40 per share.
How to Place a Stop On Quote Order on Etrade
Placing a Stop On Quote order on Etrade is relatively easy. Here are the steps you need to follow:
- Log in to your Etrade account
- Select the stock you want to trade
- Select "Trade" and then "Sell"
- Select "Stop On Quote" as the order type
- Enter the price at which you want your shares to be sold
- Enter the number of shares you want to sell
- Review your order and click "Submit" to place the order
How to Place a Stop Limit On Quote Order on Etrade
Placing a Stop Limit On Quote order on Etrade is similar to placing a Stop On Quote order. Here are the steps you need to follow:
- Log in to your Etrade account
- Select the stock you want to trade
- Select "Trade" and then "Sell"
- Select "Stop Limit On Quote" as the order type
- Enter the stop price at which you want your shares to be sold
- Enter the limit price at which you want your shares to be sold
- Enter the number of shares you want to sell
- Review your order and click "Submit" to place the order
Advantages and Disadvantages of Stop On Quote Orders
The advantages of Stop On Quote orders are that they are easy to use, and they can protect your investment against potential losses. The disadvantages of Stop On Quote orders are that they can be triggered by short-term market fluctuations, and they can result in your shares being sold for less than their actual value.
Advantages and Disadvantages of Stop Limit On Quote Orders
The advantages of Stop Limit On Quote orders are that they provide additional protection against potential losses, and they can ensure that your shares are sold at a reasonable price. The disadvantages of Stop Limit On Quote orders are that they can be more complicated to use, and they may not be triggered if the stock price falls too quickly.
Conclusion
Stop On Quote and Stop Limit On Quote orders are two essential tools that investors can use to protect their investments against potential losses. Etrade offers both types of orders to its clients, and it is essential to understand the advantages and disadvantages of each type before placing an order.
