Stop-Limit-on-Quote Orders

A stop-limit-on-quote order is a type of order that combines the features of a stop-on-quote order with those of a limit order. A stop-limit-on-quote order will be executed at a specified price (or better) after a given stop price has been reached. Once the stop price is reached by the market, the stop-limit-on-quote order becomes a limit order to buy (or sell) at the limit price or better. This order is then handled as defined by a limit order.

The primary purpose of a stop-limit-on-quote order is to give you more control over where the order should be filled. The downside, as with all limit orders, is that the trade will not be executed if the stock does not reach the limit price. These types of orders may be placed with special instructions, like GTC (good 'til canceled). Stop-limit-on-quote orders are used by some investors to buy a stock when it reaches a certain price, allowing the investor to buy when the stock has upward momentum behind it.

For this example, we only want to sell our fictional XYZ stock if the price drops to $29.75, but we don't want to sell at a price lower than $29.75. A regular stop-on-quote order becomes a market order as soon as the stop price is reached. However, a stop-limit-on-quote order becomes a limit order once the stop price is reached. In this example, we are only going to sell our position if the price of the stock drops to $29.75. Then, the stock must trade at $29.75 or higher. This order takes a little time to reason through. Just like a stop-on-quote order, a stop-limit-on-quote order must be triggered. After the trigger, this order type then turns into a limit order.

  1. Hover over Trade and click Stocks/ETFs Order under the Trade Stocks/ETFs heading.
  2. Choose Buy or Sell from the first drop-down box (choose Sell for this example).
  3. Enter the number of shares and the symbol. Next, select Stop-Limit-on-Quote from the drop-down box next to Order Type. As soon as you select Stop-Limit-on-Quote for your order type, the stop price and the limit price fields will appear. Both are mutually exclusive and do not require similar prices. In this example, we have decided to make our stop price and our limit price exactly the same.

We have decided to use GTC duration for this order.

As a refresher, once XYZ drops down to $29.75, the stop-limit-on-quote order is triggered, and the order becomes a limit order with a limit price of $29.75. A stop-limit-on-quote has the potential for triggering and never filling if the stock never travels at or higher than our limit. This is important and could lead to frustration if not understood.

  1. Review and complete your order as you would any other order type.

Stop-Limit-on-Quote Requirements

Stop-on-quote orders must be placed at least $.10 below the current bid or above the current ask.

Scottrade has established this guideline due to the possibility of the order being invalid if the market price moves below the designated sell stop price or above the buy stop price.

NOTE– Stop-on-quote and stop-limit-on-quote orders are not accepted for Bulletin Board/Pink Sheets placed through the Scottrade® trading site, but stop limit orders may be placed over the phone through your local branch office.

The content provided is for informational and/or educational purposes only and should not be considered a recommendation or an endorsement of any specific investment strategy. Your choice to engage in a particular investment or investment strategy should be based solely on your own research and evaluation of the risks involved your financial circumstances, and your investment objectives. You are fully responsible for your investment decisions.