2019: How to enter limit or stop loss orders on WeBull 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 Webull

If you’ve just opened a Webull account and are brand new to trading, you may be wondering how to actually place an order and what the different order types and settings mean. This article will walk you through the order creation process on the Webull app and explain what Limit and Stop Loss order types are used for.

What is a Limit Order?

A limit order to buy a stock or ETF is an order type where you specify the maximum price you’re willing to pay, or in the case of a limit order to sell, the lowest price you’re willing to sell, your shares for. This limit that you establish is called the limit price. It’s possible that the broker may be able to get you a better price when they execute your order (that means a price below your limit for purchases or a price above your limit for sales) depending on the market environment, but the limit order type guarantees that you will not pay above your limit price for buys or receive below your limit price for sales.


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For example, let’s say we are looking to purchase 1,650 shares of Lyft Inc. (LYFT) in our Webull paper trading account below and we are willing to pay up to but not more than $48.00 per share. We created the below limit order to buy (side = Buy) for a quantity of 1,650 shares and a limit price of $48.00 per share. The time-in-force field says “Day”, which means the order will only be active during this single trading day and if it’s not filled by 4:00PM when the market closes it will be cancelled.

It’s important to note that our limit price of $48.00 is about 1% below LYFT’s current market price of $48.54. This is perfectly fine, but we must also accept that it may take some time for this order to execute as we’ll have to wait for the market price to come down closer to our limit order. And there is always the risk that LYFT goes up from here and never reaches out limit price and therefore a chance that our order never gets filled.

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What is a Stop Loss Order?

A stop loss order can be used to buy or sell a stock but is more commonly used for sell orders because, as the name implies, it can help “stop” your losses from getting worse while at the same time allowing you to continue to make money so long as the stock keeps going up. With a stop loss order we tell the broker that we want to sell our shares, but only if and when the stock’s price comes down to a specified level. This acts as insurance by letting us to continue holding and benefiting from a rising stock while at the same time putting in a floor that locks in a certain amount of gains (or prevents losses beyond a specified amount) if the stock price were to fall.

Continuing from the previous example, let’s say our limit order to buy 1,650 shares of LYFT was executed at our limit price of $48.00 and that over the next few days the stock price shoots up to $52. We’re up a nice 8.3% on our position and we think the stock has room to grow so we don’t want to sell it yet. But we recognize that LYFT has seen some volatile trading and want to guarantee that we at least walk away with some profit if the stock turns south. So we enter a stop loss order with a stop price of $49.00 per share. This means that Webull will sell our LYFT shares at the market price only if and when the market price comes down to $49.00 – if it never comes down the stop loss order to sell will never be executed.

Summary

The limit and stop loss orders are two of the most common orders investors choose when investing on the Webull platform because they offer the investor more control over the ordering process and downside protection than they would receive with a standard market order.

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