Anyone with a bit of experience in the stock market knows that trading stocks is never quite as simple as "buy" and "sell." As stock prices are continually in flux, a stock selling at $100 may be $110 by the time your order is placed. This is why stop limit orders are so useful for the home investor. A stop limit order allows you to set the price at which you would like your order to be filled, as well as what your maximum is.
Although it may seem complicated at first glance, it is a relatively easy process using TD Ameritrade, and offers a great deal of flexibility. For example, if you would like to buy a stock when it hits $50, but would be willing to go as high as $55, a stop limit allows you to get the lowest price within that range. In this way, you will neither pay more than you were willing to for a stock, nor will you miss out on a good buy that was only slightly above your asking price.
Step 1: Logging In and Selecting Stock
Log in to your TD Ameritrade account, and locate the stock you would like to purchase. This can either be done by entering the stock symbol in search box the top of the screen or using the "symbol lookup" tool, which can be found in the same search box.
Step 2: Filling in the Order Form
Click the green "Buy" button on the stock's page. This will fill in the order form at the bottom of the page.
Step 3: Entering the Share Quantity
Enter the quantity of shares you would like to purchase and set the order type to "Stop limit."
Step 4: Completing the Price Fields
Fill in the price fields. The "Price" field should contain the price you would like the order to activate at, and the "Act price" (Actual price) field should contain the upper limit you are willing to pay per share.
Step 5: Setting the Expiration Date
Set the expiration date for your order. Click "Review order," and if everything is to your liking, click "Place order."
Remember to take into account TD Ameritrade's commission when placing your order. This cost may affect your profit margin.