Today's War Room Trading Recap

Understanding Limit vs. Stop-Limit Orders in Trading

This segment explains when to use limit orders versus stop-limit orders based on price action and market position, using Apple (AAPL) as an example.

• Limit Order: Use when price is moving toward a level you want to reverse from.
  Example: If AAPL is trading above $219.15 and you want to buy at that level, place a limit buy order at $219.15. This ensures you only get filled at or below that price, and it won’t trigger until the stock drops to your desired level.

• Stop-Limit Order: Use when price is moving toward a breakout or breakdown, and you want to join the move once confirmed.
  Example: If AAPL is trading below $221.48 and you want to buy if it breaks above, place a stop at $221.48 and a limit at $221.50. The order activates only if the price hits your stop and will only fill up to your limit price.

• Short Example:

  • To short AAPL if it falls below $220.13, use a stop-limit order with a stop at $220.13 and a limit at $220.10.

  • If you want to short at a resistance level like $222 (price moving up into it), use a limit sell order at $222.

Key Rule of Thumb:

• Use a limit order if price is approaching your level from the opposite direction and you want to reverse at that level.

• Use a stop-limit order if you’re trying to catch momentum after the level is broken and want to follow the trend.

This logic helps you determine the correct order type based on chart position and trade intent.