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r/stocksr/stocks· u/ComfortInConfusion· 3d ago 0

Why do Stop Loss instead of Stop Limit?

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Author asks why use Stop Loss instead of Stop Limit orders, sharing a confusing chat with an AI bot.

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I am trying to understand the value of a Stop Loss order over a Stop Limit order. If I bought $100 worth of stock and want to make $50 on it, I put a Stop Limit order for $150 on it. As soon as a buyer is available at that price or better, it sells. But if instead I do a Stop Loss at $150, it may sell for less. It's not a guarantee that a buyer will ever be available at $150, but it's also not a guarantee that the stock price will ever get to a certain value either and initiate a Stop Loss!

My understanding is coming mostly from stupid AI chatbots, but the alternative now is Googling and getting stupid AI websites, so here I am.

If you want to see the maddening conversation I had with Claude that ended with Claude saying "Uncle," see below.

CLAUDE: "Honestly, given everything we've worked through, I'm struggling to give you a good answer. With a limit order, you set your minimum and if a buyer meets it, you sell. It's hard to see the advantage of a loss/market order over that."

https://claude.ai/share/515bb0b2-53b6-4b93-92cd-d0a7b54ddcb4

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