This is confusing.
Stop limit at $65
Why in the spoiler section, the answers are $64.90 and $65.05? If following the previous example, shouldn’t it be $64.95 and $65.05??
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Hi @FoxMcCloud - thanks for using the forum. First, let’s recreate what’s in the reading material:
An investor goes long 100 shares of stock @ $70. They place a sell 100 shares @ $65 stop limit order.
Trading tape: $65.10… $64.90… $64.95… $65.05… $64.85
At what price will the order trigger? At what price will the order execute?
Trigger = $64.90
Execute = $65.05
The reading material is correct. It’s possible you’re reading the “ticker tape” incorrectly. You’re supposed to read the tape (65.10… 64.90… 64.95…) in order from left to right. While $64.95 is closer to the stop price, it is not the first price we find below $65. For the stop to trigger, we’re looking to identify the first price that’s below $65 on the tape. The first price where this occurs is $64.90.
Hopefully that solves it for you. Please let me know if you have additional questions.
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Ah!
I see what you mean now. I was thinking “what’s the next lowest price leading to $65”
Made sense!
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Good to hear. Happy new year!
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