ThinkorSwim Tutorial - How to set Stop Orders (MKT) & StopLimit Orders (LMT)

This tutorial explains how to use the Risk Management Orders in the Think or Swim Trading Platform. By the end of this article you will be able to easily place Stop Orders & StopLimit Orders on your own. This tutorial follows the trading guide: Think or Swim Tutorial - Placing Stop Orders and Stop Limit Orders. Before reading I recommend visiting the Link above.

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“Stop” Orders

If you choose to set a “Stop” Order you will get a second row or line in your Order Entry Tool menu. At this point you will have these pieces of information on the “Price” menu:

• Your order will be at the Market (MKT).
• You can set a Stop price at which a sell order will be activated (STP). You can do that going up and down with the arrows or manually taping in from the keyboard the price which you want to set your stop at.

Let’s assume you have purchased 100 shares at $25 per share. You may wish to place a Stop Order for $23. You need just to tape in 23 from your keyboard and click enter. If you do so you will have set an order to sell a certain number of MSFT shares at the Market if the stock price drops at or below $23.

Free Tutorials - Stocks, Options and ThinkorSwim. Click Here.

“StopLimit” Orders

If you would prefer to set a “Stop Limit” Order go back to the “Order” menu and choose “StopLimit”. Instead of a Market Order you are going to set now a Limit Order (LMT). The system will ask you now what is the limit price that you wish to submit. Now what is really important is that you should set that limit price in a way that it matches the Stop price or even be a little bit lower just to allow yourself some room in case that stock price may be falling very quickly when that stop price is reached. In our example, you may consider to set your limit order at $22,50.

To sum up you have bought 100 shares MSFT at $25 each and set a “StopLimit” order at $23 with a limit order at $22,50.

Now the system knows that if your stop price of $23 or lower was ever reached it has to activate the order, but in this case it is going to submit a Limit Order trying to sell shares at $22,50 or higher. You must be aware that submitting a Limit Order you have not guaranty that it will be filled.

The main decision of choosing between a Stop Order and a Stop Limit Order depends on whether you wish to hold the shares. If you want to get out from your position at any cost regardless of the price choose a Stop Order (MKT), if you want to hold your shares below a certain price choose a Stop Limit Order (LMT).

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Do not forget to visit my website at www.FromZeroToOptions.com to get tutorials, instructions, articles and much more stocks and options related.

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Then you have to choose the Time in Force (TIF) of your order. This is set at the day as default, but for this kind of order you need to change it in GTC (Good-till-Cancelled) in order to avoid that your order is cancelled at the end of the day. Once you have the order you desire click on the “Confirm and Send” box on the right corner below where you get the “Order Confirmation Dialogue” Box and check all the order detail you have filled in before.

After confirming your order you will see below on the “Order Entry Tool” that it will be “Working”. This just means that the Think or Swim platform is watching for the price. If and when the stock should ever trade at $23 or lower, it will automatically submit a Limit Order to try to Sell shares at a price not lower than $22,50

Try to use Stop & Stop Limit Order as Risk Management tools and you will be one step closer to becoming a Master Trader.

Keep learning about stop Orders by reading: Think or Swim Tutorial - Placing Stop Orders and Stop Limit Orders.

Free Tutorials - Stocks, Options and ThinkorSwim. Click Here.

In the next GroWithYou Trading Tutorial

• Types and Styles of Options
• What means exercising Options
• Exercise Call Options early

Keep learning about ThinkorSwim and Stock Options by going to: Think or Swim Tutorial - How to "Exercise" Call Options.

Here you can find a mini “free video tutorial” prepared by the professional traders of the "Options A to Z" company that can help you in understanding all the concepts discussed in this article. For further information visit the website at www.optionsAtoZ.com.

Watch the following "Free Video Tutorial”

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