To sell at a limit price, you place a sell limit order. This order ensures your stock is sold at a specific minimum price you define, or higher.
Understanding the Sell Limit Order
A sell limit order is a type of instruction you give to your broker to sell a stock only if the market price reaches or exceeds a price you set. This price you set is called the limit price.
- Key Principle: With a sell limit order, a stock is sold at your limit price or higher.
- Your Control: Your limit price should be the minimum price you want to receive per share for your stock.
This is different from a standard market order, which would sell your shares immediately at the best available price, which might be lower than you desire.
Practical Example
Let's use the example provided in the reference:
- Scenario: YOWL stock is currently trading at $10 per share.
- Your Goal: You want to receive at least $12 per share when you sell.
- Action: You would set your limit price to $12.
| Order Type | Price Guarantee? | Execution Speed | Used For |
|---|---|---|---|
| Sell Limit | Guaranteed minimum price | Not guaranteed | Selling at a desired high price |
| Standard Sell Market | No price guarantee | Guaranteed | Selling immediately |
By placing a sell limit order at $12 for YOWL, your shares will only be sold if the market price rises to $12 or goes above it. If the price never reaches $12, your order will not be executed.
Why Use a Sell Limit Order?
- Maximize Selling Price: It helps you aim for a higher selling price than the current market value.
- Prevent Selling Too Low: It prevents your shares from being sold at an undesirable low price during a market dip.
How to Place the Order
The exact steps vary slightly depending on your brokerage platform, but generally involve:
- Logging into your brokerage account.
- Navigating to the trading section.
- Selecting the stock you wish to sell.
- Choosing "Sell".
- Selecting "Limit Order" as the order type.
- Entering the number of shares you want to sell.
- Entering your desired limit price (the minimum you'll accept).
- Specifying the order's duration (e.g., good until canceled, good for the day).
- Reviewing and submitting the order.
By setting a sell limit order, you take control over the minimum price you are willing to accept for your shares, ensuring you sell at your limit price or higher.
