A STOP-LIMIT order is similar to a stop order in that a stop price will activate the order. However, once activated, the stop-limit order becomes a buy limit or sell limit order and can only be executed at a specific price or better. It is a combination of both the stop order and the limit order.

A STOP-LIMIT order eliminates the risk of a stop order where the investor is not guaranteed an execution price, but exposes the investor to the risk that the order may never be filled even though the stop price has been reached. The investor could "miss the market" in the security or commodity altogether.

For market centers that do not accept "native" Stop Limit orders, IB simulates this order type.

See Stop Orders for an explanation on the simulation of Stop Orders, and hours of availability.

You have purchased 100 shares of XYZ for $50.00/share. You want to limit possible loss on this stock, so you create a stop limit order to sell 100 shares of XYZ with the stop price set to $46.00 and the limit price set to 45.98. If the price of your stock falls to $46.00, your order is activated and a limit order to sell 100 shares of XYZ is transmitted.