2019: How to enter limit or stop loss orders on Firstrade for stocks and ETFs? How much broker is charging for buy and sell stop loss and limit orders?

Placing Limit and Stop Loss Orders with Firstrade

If you just recently opened a Firstrade account and are ready to start trading but are not sure how to choose from the different order types, this article is for you. We will discuss two of the most popular order types – limit and stop loss orders – including when and how to use them in your Firstrade account.

Limit Order

Starting with limit orders, these are used to exercise more control over the price you receive when buying and selling securities. With a limit order, you specify the highest price per share you’re willing to pay (called the limit price) for stock or the lowest price you’re willing to accept when selling stock. This guarantees that the cost of your purchase won’t exceed the limit you set (but it could be less) and that the proceeds received from a sale won’t be less than your limit (but could be higher).

Once you submit a limit order, Firstrade will route it to its network of market makers to see what prices they are willing to execute it at. If one of them offers you a better price than your limit price you will get the better price, or if your limit price is the best they are offering your order will fill accordingly. If none of the market makers are willing to fill at your limit price, then your order will simply remain open until it either gets filled or expires.

Example of Firstrade Limit Order

Although limit orders can be used for both buys and sells, we will use a limit order to buy as our example, but the logic is the same for sells. In the below screenshot, you can see that we have created a limit order to buy 200 shares of LYFT with a limit price of $55.60 that expires at the end of the trading day. Because our limit price is below the ask price (it’s actually equal to the current bid price) our order likely won’t be executed right away like a market order would.


First Trade Limit Order


Our order will be submitted to the market makers for execution, but they probably won’t be willing to sell to us at $55.60 or less since the stock’s asking and last price are $56. Our limit price is not too far below that though, so there’s a good chance it may get filled later in the day if and when the stock price moves down a little.

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Stop Loss Order

A stop loss order is a popular choice when selling stock but could be used for buys a well. For sells, a stop loss order acts like an insurance policy to lock in the lowest price - the stop price - you will allow the stock to fall to before selling the position. It’s different from limit order to sell where you say I want to sell my shares for “X” price or higher because when you submit a stop loss order to sell you are telling Firstrade that I want to sell my shares, but only if and when the stock price comes down to my stop price. If the stock price never comes down to your stop price, Firstrade won’t submit your order for execution.

Example of Stop Loss Order

Continuing from our previous example, let’s assume that our limit order to buy 200 shares of LYFT was eventually executed at our limit price and we expect that over the coming months the stock will soar to the $70-$80 range. We are fairly confident in our forecast, but nonetheless we want to protect our position on the downside in case the unexpected happens – let’s say we decide if the stock ever dropped to $52 we would sell it to limit our losses on this position to just over 6%.


First Trade Stop Loss Order


We would submit the below stop order to sell 200 shares of LYFT with a stop price of $52 and a duration of the next 90 days. If our forecast proves accurate and the stock moves up from here this sell order will never be activated and we’ll have an unrealized gain on this position. If our forecast doesn’t pan out (maybe there was some unexpected negative news) and the share price falls to $52, or lower, Firstrade will submit our sell order to the market makers to execute at the current market price. Although this means we’d lose ~6% on the trade, we can sleep well at night knowing that we wouldn’t be losing more if the stock price continues south.

A stop order to buy stock follows the same logic except your stop price needs to be above the current market price. With a stop order to buy, Firstrade will submit our purchase order for execution only if and when the stock price rises to meet our stop price. Buyers might want to use this approach if they follow technical charting signals and interpret a stock reaching a certain price target as a sign of more upward price action in the future.

Firstrade Limit and Stop-Loss Orders Summary

In summary, limit and stop loss orders are two of the most popular order types used by traders. They give the trader more control over the price they pay or receive for their shares than a market order would and can help them protect their portfolio from unexpected downside. Firstrade makes it easy to use both of these order types.

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