How to set up a stop limit order with Questrade

Order types 101

Before we set up a stop limit order, let’s start with a quick refresher on a few different order types. Reviewing these will help make sense of the stop limit order.

A Market Order is the most basic of all order types. Using a market order, you can buy or sell a security at the best price available in the market at the time your order is executed. When you buy a stock using a market order, you pay the market’s ask price. Similarly, you will receive the market’s bid price when you sell.

A Limit Order will let you set two conditions:

1. A limit price: either the maximum price you’re willing to pay for a stock or the minimum price you’re willing to receive for a stock.
2. A time component: a duration that specifies how long your order is active.

Limit orders are only executed when the stock’s price reaches the set limit price (or better), within the specified timeframe. If the stock’s price doesn’t reach the limit price within that time, the order will not be executed and will expire. Though limit orders will let you set a price you want to buy or sell a stock, there is no guarantee that an order will be filled.

Let’s suppose, for example, that BCE.TO is currently trading at $62 a share. You are interested in buying 100 shares of the stock but you are only willing to pay $60 per share, not a penny more. Even though the stock is trading at $62, you can place a limit order now to buy your 100 shares at $60 or lower. If the stock price drops to $60 per share within your specified duration, your order will execute at $60 or lower. If the stock price does not reach the $60 limit price, your order will not be filled and may expire.

A Stop Order is used to buy or sell a security once it crosses a threshold known as the stop price. Stop orders are primarily used to limit losses by setting an entry or exit price trigger on a given stock. If a stock reaches the predefined stop price, a market order will automatically execute at the best available price. While this might seem handy, it’s important to note that stop orders are not allowed on Canadian exchanges.

Now that we have these three order types in hand, let’s find out how they work together as a stop limit order.

What is a stop limit order?

As the name implies, a Stop Limit Order combines the features of a stop order with a limit order.

For stop limit orders, you need to set three conditions:

1. A stop price: the target price that will trigger a trade
2. A limit price: the stock price you’re willing to pay or receive
3. A time component: a duration that specifies how long your order is active

If the stock’s market price reaches the predefined stop price, a limit order will automatically be submitted with the predefined limit price. If both the stop price and limit price conditions are met in the given timeframe, your order will be filled at the limit price or better. As with limit orders, there is no guarantee that a stop-limit order will be filled.

An example of a stop limit order

Let’s see how this works in the real world. Suppose you bought into BCE.TO at $60 per share but anticipate a decline in the near future. You don’t want to lose more than $5 per share, so you set up a stop limit order with a stop price of $56 and a limit price of $55.

If the stock dips to $56, the stop price will trigger a limit order to sell at $55 or higher. If the stock were to decline below $55, the limit order would ensure that you don’t sell your shares at a lower price.

How to set up a stop limit order with questrade

Here’s how you set up a stop limit order with Questrade:

1. Search for the Stock Ticker Symbol you’d like to trade.
2. Specify the Quantity you’d like to trade.
3. From the Order Type dropdown menu, select Stop Lmt.
4. Specify the Limit price—the price you’re willing to pay or receive.
5. Specify the Stop price—the market price that triggers your order.
6. Select a desired timeframe from the Duration dropdown menu.
7. Confirm your Account.
8. Click Buy or Sell to submit the order.

Questrade allows you to choose between five timeframes depending on how long you want your stop order limit to remain active:

• Day (Default): The order will remain active until the end of the current trading day. If it is not filled, the order is cancelled.
• GTC (Good ‘til cancelled): The order will remain active (max. 90 days) until either filled or manually cancelled. If it is not filled, the order is cancelled.
• GTD (Good ‘til date): The order will remain active until the specified date. If the order is not filled by the given date, the order is cancelled.
• IOC (Immediate or cancel): All or part of the order will fill immediately. Any portion of the order not filled immediately is cancelled.
• FOK (Fill or kill): The order will fill immediately and completely or not fill at all and be cancelled.

Learn more about placing a trade with Questrade by watching the following video:

When to set up a stop limit order

When buying securities, set a stop limit order to monitor and execute a trade as your target stock reaches the price you are willing to pay. If the stock rises and stays above your stop price, your order will not execute, and you won’t overpay.

When selling or exiting a position, setting a stop limit order can protect your portfolio by establishing the lowest price you’re willing to accept. If the stock price falls and reaches the stop price, your sell limit order will be submitted and you’ll have a chance to contain your losses.

In executing orders at prices you’re comfortable with, stop limit orders can reduce your risk and can be an effective tool for building your portfolio.

Transfer funds instantly to start trading and earning now

If you’re ready to start trading, you’ll have to deposit your money and wait a few business days for your funds to make their way into your account. That can be frustrating but you can now make the wait a thing of the past with Questrade’s Instant Deposit feature.

Using Instant Deposit, you can instantly transfer up to $3,500 per day (or your bank’s daily transaction limit) into your self-directed or Questwealth account to use right away. Making an instant deposit is easy- it only takes a few minutes to set up before you can start putting your money to work. To set up your VISA Debit instant deposit:

1. Log in to your Questrade account.
2. From the top navigation bar, select Funding > Instant deposit.

3. From the New deposit tab, select ADD NEW DEBIT CARD.

4. Select your financial institution from the pop-up window, log in to verify and enter your debit card details.

5. Once your VISA debit has been accepted, you can select it in the From debit card field in the New deposit

6. Enter the Canadian dollar amount you want to deposit and click

7. Once you confirm your deposit, a pop up will appear to say that your deposit is completed and you’ll be directed to your Deposit history.

Now you might run into a bit of a snag- some banks don’t verify online banking information outside of business hours. If you’re setting up your VISA Debit on a weekend or holiday and get an error, you’ll need to wait until the next business day to set up and add your VISA Debit Card. Otherwise, it should work smoothly.

Final word

Stop limit orders can help you stay on top of changes in the market when you can’t keep a close eye on your portfolio. They allow you to automatically submit orders when a stock reaches a target price and provide you with better control over your trades.

The new VISA debit Instant Deposit feature will also let you deposit funds so you can use them immediately to start making trades and earn referrals quickly.

Questrade makes it easy for even beginner investors to start trading stocks. If you’re hesitant to start investing, the ability to adjust every detail is a great way to test the waters and gradually take more risks as you become more comfortable.

For more information, read our complete Questrade review.

Moneywise contributor Daniel Teo has no position in any of the stocks mentioned.