Etrade Stop Limit On Quote Vs Stop On Quote
Introduction
When it comes to trading stocks, it's important to have the right tools at your disposal. Online brokers like Etrade offer a variety of order types to help you execute your trades with precision. Two popular order types are stop limit on quote and stop on quote. In this article, we'll explore the differences between these two order types and how they can be used to your advantage.
What is a Stop Order?
Before we dive into the specific order types, let's first define what a stop order is. A stop order is an order to buy or sell a stock once it reaches a certain price. When the stock hits your designated price, the stop order is triggered and the trade is executed.
Stop Limit on Quote
Stop limit on quote is a type of stop order that allows you to set both a stop price and a limit price. The stop price is the price at which the stop order is triggered, while the limit price is the maximum price you are willing to pay or the minimum price you are willing to sell for.
When you place a stop limit on quote order, you are essentially telling Etrade to only execute the trade if the stock hits your stop price and the price is within your specified limit. If the stock hits your stop price but the price is outside of your limit, the trade will not be executed.
Stop on Quote
Stop on quote is a simpler type of stop order that only requires you to set a stop price. When the stock hits your stop price, the trade is executed at the next available price. This means that if the price has already moved significantly from your stop price, you may end up buying or selling at a less favorable price than you had hoped.
Which to Choose?
So, which order type should you choose? It ultimately depends on your trading strategy and risk tolerance. Stop limit on quote can be useful if you want to limit your exposure to price fluctuations and are willing to sacrifice potential gains for greater certainty. Stop on quote, on the other hand, is useful if you want to execute a trade quickly and are willing to take on more risk.
Conclusion
Understanding the differences between stop limit on quote and stop on quote can help you make more informed trading decisions. By choosing the right order type for your specific situation, you can increase your chances of success in the stock market.