Stop-Limit-on-Quote Order Execution

A stop-limit-on-quote order is an order to buy or sell a security at a specified price or better (limit price), but only after a given stop price has been reached or passed. The order initially is a stop-on-quote order that, once triggered, then becomes a limit order. The order will only execute at the limit price or better.

Stop-Limit-on-Quote Scenario 1

You bought 100 shares of XYZ at $10 per share. XYZ is currently trading at $12 but is trending downward, and you attempt to protect your profit by setting a stop-limit-on-quote order with a stop price of $11 and a limit price of $10. You want to capture a $1 profit per share, and you are only willing to sell at $10 or better. XYZ continues falling and gaps down from $11 to $9.50. Your order isn't placed. What happened?

Because the stock hit $11, your stop-on-quote order was triggered and your limit order is in place. But, because the stock gapped down to $9.50, your limit order didn't trigger. Your limit order would only have been placed if XYZ met or surpassed your $10 limit. For a sell order, a higher price is more favorable, so 'surpassed' means 'went higher than', in this case. If XYZ had moved from $11 to $10.50, for example, then both your stop-on-quote order and your limit order would have triggered.

Stop-Limit-on-Quote Scenario 2

You want to sell 100 shares of XYZ at $11, so you place a stop-limit-on-quote order where both the stop price and the limit price are $11. XYZ briefly hits $11 but quickly keeps falling. Your stop-on-quote order triggers, but your limit order does not. What happened?

Setting your stop price and limit price as the same number typically lowers your chances of both orders executing. In order for both the stop-on-quote and limit orders to trigger, XYZ would have to stay at $11 for long enough for your limit order to execute, or it would have to hit $11 exactly and then bounce back up above $11. Both of these occurrences are unlikely if your stock is falling in price, as it is in this scenario.