Sell Limit

What Sell Limit means

A sell limit rests above the prevailing market and is executed only if the bid rises to the specified level or higher, never at a worse price. It expresses the view that an advance will stall at a particular level and reverse, so it is used to short into resistance, into a supply zone, at the upper boundary of a range, or at a retracement level after a decline. Like all limit orders it guarantees price rather than execution, and may never be triggered at all.

It is easily confused with a buy stop, since both are placed above the market. The difference is directional intent: a buy stop is a bet that price breaks higher and keeps going, a sell limit a bet that price reaches the level and turns. On the chart they can sit a pip apart while representing opposite trades, which is why order type should be selected from the thesis rather than from the level.

Sell limits are also the natural take profit for an existing long position, since closing a long means selling at a higher price. As with any resting order above the market, the fill depends on the bid rather than the ask reaching the level, so with a one pip spread the ask must print roughly a pip above the target before the order is touched.