What Is A Sell Stop Order And How Do You Trade With It?

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By Richard Naxon

What is a sell stop order? What is the difference between a sell stop and a sell limit order?

In this post, you will find out.

Let’s get started…

What Is A Sell Stop Order?

A sell stop order is a pending order which is placed below market price in anticipation that the price will fall down, hit the sell stop pending order and activate the trade.

So the two important things about a sell stop order is that:

  1. the current price is up and you anticipate that that it will fall down
  2. so your sell stop order is placed below the current price, to “catch” price should it move downward.

Advantages of Trading With Sell Stop Pending Orders

Here are the advantages of trading with a sell stop pending order.

1: Confirmation of direction of price as well as momentum

If a sell stop order gets triggered, it means there’s a bearish momentum behind it in order for that sell stop order to be triggered.

Now, the triggering of the order does not guarantee that that trade will be profitable but at the time of the triggering of the order, the price is moving in your favor.


2:  Set and Forget

A sell stop order allows you to set and forget. You don’t need to be glued to your computer waiting for the trigger to buy or sell.

Many of you will not have time to sit and monitor your your charts for trading setups and therefore, the use of sell stop orders becomes very handy in such situations.

All you do is place your pending sell stop order, place your stop loss, and your take profit target and walk away.

3: Eliminate the “Need” To Trade

Placing a sell stop order also eliminates the need to trade, or call it itchy fingers to press the buy and sell buttons.

When you place your pending sell stop order and walk away, you remove yourself from being glued to your computer screen.


4: Develops Trading Discipline

Here’s the thing with forex trading, price will go where it wants to go. Once you are in a trade, there’s nothing you can do about it.

So when you place your pending sell stop order and walk away, you are really practicing trading discipline.


Well, you placed a pending order and walked away and you allow the trade to play out. You are not sitting there and “forcing” trades.


How To Place A Sell Stop Pending Order On Mt4 Trading Platform

Placing a pending sell stop order on mt4 trading platform is really simple.

Here are the steps:

Step 1:

Right click on the chart of the market you want to trade and then slide your mouse over “trading” and then “new order”, click on it and then you should see this box appear:

Step 2:

The next step is to select “Pending Order” from the order “Type” drop down menu.

Then, you will select Buy Stop or Sell Stop, depending of course on which direction you are trading (Buy Stop for buy entry, Sell Stop for sell entry).

Step 3:

Next, you need to select the price you want to enter the market at and the expiry date of the entry order; the expiry date means if the market hasn’t filled your order by that date, the order will automatically be cancelled.

You also need to decide the volume you will trade (lot size) and put in your stop loss level and profit target

What Is The Difference Between A Sell stop And As Sell Limit Order?

Well, both orders a pending orders.

A sell limit order is a pending sell order placed above the current price.

You place a sell limit order if you think that price will go up, hit and trigger your sell limit order and then drop down.

For example, you see a major resistance level on your chart and you think that price will go and hit it an move down. You can place a sell limit order to trade that situation.


So there you have it. This is how you trade with a sell stop pending order. You’ve also been giving the advantages of trading with a sell stop order.

Click this link if you want to also know about buy stop order.

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