In the world of algorithmic and automated trading, precision in order execution can make a significant difference in performance. While basic Limit and Market Orders are commonly used for entry points, advanced traders often rely on Stop Limit and Stop Market Orders to optimize timing and improve trade accuracy. These order types allow for more strategic positioning, especially when integrating them into One-Click Order Templates or custom trading strategies within platforms like Brokerage Plus.
This guide dives deep into how to effectively use Stop Limit and Stop Market Orders as entry mechanisms, covering setup procedures, key configurations like Stop Price, Limit Reference, and Limit Offset, and practical applications using filters and formulas.
Understanding Stop Limit and Stop Market Orders
What Is a Stop Limit Order?
A Stop Limit Order combines the functionality of a stop order and a limit order. It triggers only after a specified Stop Price is reached. Once triggered, it becomes a Limit Order, meaning the trade will execute at the defined Limit Price — or better — but not worse.
For example:
- You set a Stop Price at $50 and a **Limit Price** at $49.50 for a long position.
- When the stock hits $50, the order activates.
- The system will attempt to buy at $49.50 or lower — but if the price jumps past that, no fill occurs.
This offers control over entry price but carries the risk of non-execution during fast-moving markets.
What Is a Stop Market Order?
A Stop Market Order, by contrast, becomes a Market Order once the Stop Price is hit. It ensures execution (assuming liquidity), but not at a guaranteed price.
Example:
- Set a Stop Price at $50.
- Once the stock trades at or above $50, your order executes immediately at the best available market price.
While this guarantees entry, slippage may occur in volatile conditions.
👉 Discover how smart order routing enhances trade execution with advanced entry types.
Setting Up Entry Orders in Brokerage Plus
To configure Stop Limit or Stop Market Orders as part of your One-Click Order Template or Custom Trading Strategy, follow these steps:
- Right-click within the Strategies Tab in Brokerage Plus.
- Select New/Edit Trading Strategy.
- Navigate to the Order Details Tab.
- Locate the Entry Order Section.
Here, you’ll find the option to select your preferred Entry Order Type, including both Stop-based options.
Configuring the Stop Price with Stop Formula
The Stop Price determines when your order activates. To define it:
- Choose from pre-built Trade Ideas Filters or create a Custom Formula via the Stop Formula dropdown.
Important considerations:
- The formula must resolve to a static dollar amount or percentage value.
- Dynamic indicators such as moving averages or bar-based stops are not supported, because Trade Ideas does not hold orders — they are sent directly to the brokerage upon trigger.
For instance:
- Using “Today’s High” as a filter sets a fixed stop level based on that day’s peak price.
- A custom formula like
Previous Day Close + $0.50creates a static trigger point.
This constraint ensures reliability and prevents recalculations that could delay execution.
Setting the Limit Price: Limit Reference Options
When using a Limit Order or Stop Limit Order, you must specify how the Limit Price is determined through the Limit Reference setting.
You have two choices:
1. Last Price
- The system uses the current market price at the moment the stop is triggered.
- Ideal for traders who want immediate responsiveness without predefined offsets.
2. Trade Ideas Filter or Custom Formula
- Allows you to anchor the limit price to technical or fundamental metrics.
- Example: Use “Yesterday’s Low” to set a conservative buy-in point below recent support.
⚠️ Note: If you choose a filter or formula for Limit Reference, the Limit Offset field will be disabled.
Fine-Tuning Execution with Limit Offset
The Limit Offset adjusts how aggressive or passive your limit order behaves relative to the base price (usually the Last Price).
- Offset = $0: You demand exact price execution.
Negative Offset (e.g., -$0.02): You're willing to pay slightly more (for longs) or accept slightly less (for shorts) to increase fill probability.
- Long trade: Pay up to 2¢ above current price.
- Short trade: Sell up to 2¢ below current price.
Positive Offset (e.g., +$0.01): You wait for a more favorable price — one cent better than current.
- Long trade: Buy only if price drops by 1¢.
- Short trade: Sell only if price rises by 1¢.
🧠 Pro Tip: Use negative offsets when entering fast-moving breakouts where getting filled matters more than saving pennies. Use positive offsets in range-bound markets where patience pays off.
Practical Applications: Entry Order Scenarios
Let’s explore real-world use cases of Stop-based entry orders using filters.
Long Position with Stop Limit
| Parameter | Value |
|---|---|
| Order Type | Stop Limit |
| Stop Formula | Today’s High ($8) |
| Limit Reference | Price – Filter |
| Result | Stop triggers at $8; Limit set based on difference between current price and $8 |
If the current price is $10 and the filter value is $8, the limit price becomes $2 — useful for mean-reversion plays near resistance levels.
Short Position with Stop Market
| Parameter | Value |
|---|---|
| Order Type | Stop Market |
| Stop Formula | Today’s Low ($5) |
| Exit Type | N/A |
| Result | Sell short when price drops to $5 |
This setup captures downside momentum once support breaks.
Exit Order Integration (Bonus Context)
Though this article focuses on entry orders, it's worth noting that similar logic applies to exits:
- Target (Take-Profit): Use a Limit Order with a filter like “Today’s High” added to entry price.
- Stop Loss: Apply a Stop Market Order using “Today’s Low” subtracted from current price.
- Trailing Stop: Dynamically adjust stop level based on recent lows/highs.
These ensure disciplined risk management aligned with market structure.
Frequently Asked Questions (FAQ)
Q: Can I use moving averages as stop or limit references?
No. Because Trade Ideas sends orders instantly to brokerages, only static values (dollar or percentage) derived from filters or formulas are allowed. Moving averages require constant recalculation and are therefore unsupported.
Q: What happens if my Stop Limit Order isn’t filled?
If the market moves past your Limit Price too quickly after the Stop Price is hit, your order may not execute. This is common in volatile or illiquid stocks.
Q: Should I use Stop Market or Stop Limit for breakout entries?
Use Stop Market if getting filled is critical (e.g., strong momentum breakout). Use Stop Limit if you want to avoid overpaying during false breakouts.
Q: Does Limit Offset work with all order types?
Only when using Last Price as Limit Reference. If you use a filter or custom formula, the offset is disabled.
Q: Can I automate these orders in real time?
Yes — once configured in Brokerage Plus, these orders can be executed instantly via One-Click Templates or integrated strategies, provided your brokerage supports them.
Q: Are Stop Orders suitable for all market conditions?
They perform best in trending or breakout environments. In choppy, sideways markets, they may trigger prematurely due to noise.
Final Thoughts
Mastering Stop Limit and Stop Market Orders empowers traders to design precise, rules-based entry strategies that react intelligently to price action. By leveraging filters, static formulas, and thoughtful offset settings, you gain greater control over execution timing and cost.
Whether you're chasing breakouts or fading reversals, integrating these advanced order types into your workflow can elevate your trading discipline and consistency.
👉 Start applying these strategies today with a platform built for precision trading execution.