Originally Posted By: Hokiefyd
General question on a specific situation:
Say you own a stock currently valued at $20 and you have a sell order to sell if the stock falls to $18. What happens if the stock closes at $20 yesterday and opens at $15 today? Does it sell at $15 at 9:30am at market open, or would it sell at some point during after hours trading when the stock crossed $18?
The same question could apply in reverse. If the stock is valued at $20 and you have a sell order at $22, what happens if the stock opens at $25 the next day? Do your shares get sold at $22 or at $25?
It depends on a few things. Maybe this will help:
If its a day order it would be canceled at the close of the market, so nothing would happen the next day, a moot point. If it's a GTC {good till cancel] limit order it won't sell until it climbs back to $18. Nothing executes in after hours unless you enter an order for after hours.
In your second example if it was a GTC order with a $22 limit it would become a market order the next day and fill at or near $25. Now if it was entered as a stop limit order nothing would happen until the stock dropped to $22, so you could take advantage of the upswing in the price and move your limit up, or cancel the stop limit order and sell at market, or at a limit price. HTH