stops and limits

[flyingpb]

Scenerio

I buy xyz @$50
I place stop 46
I place Limit @56

If my stop is triggered, do I personally have to cancel the Limit order?
If not, how do they know I didn't want to short XYZ if it reached $ 56 on that order and was totally seperate from my buy and stop?
Thanks

(I am papertrading on Think or Swim and that question hit me while I was placing the orders since the buy was a couple days ago, and the sell orders were done today, and seperately.)

[Leth]

Originally Posted by flyingpb

Scenerio

I buy xyz @$50
I place stop 46
I place Limit @56

If my stop is triggered, do I personally have to cancel the Limit order?
If not, how do they know I didn't want to short XYZ if it reached $ 56 on that order and was totally seperate from my buy and stop?
Thanks

(I am papertrading on Think or Swim and that question hit me while I was placing the orders since the buy was a couple days ago, and the sell orders were done today, and seperately.)

if either one is hit, therefore liquidating your position... one should automatically cancel out the other...it makes sense anyway. ive never shorted stocks before nor have I placed limit orders. i have bought put options....almost the same thing but with no margin. and since i trade long term...limit orders arent conducive to my psychology. as far as stops...i use anywhere from 2 to 5% depending on volatility (2 to 5% of my total equity is the most im willing to lose on any one idea).

hopefully others in the forum will chime in!!!

good luck my friend

[flyingpb]

This may answer my question.

What risks should I be aware of when using Hard Stops?
You should be aware of a few things when using Hard Stop Orders. First, these types of orders do not protect your downside risk. If the price of your stock begins to fall and you want to sell, you may need to cancel your Hard Stop Order before placing another type of sell order (the combined number of shares for both orders can’t be more than the number of shares you own).


from BMO investorline