Stop order: Gaps down can result in an unexpected lower price.

Limit orders and price gaps

In a similar way that a "gap down" can work against you with a stop order to sell, a "gap up" can work in your favor in the case of a limit order to sell. In the next example, a limit order to sell is placed at a limit price of $105. The stock's prior closing price was $104. If the stock opened at $110 due to positive news released after the prior market's close, the trade would be executed at the market's open at that price—higher than anticipated and better for the seller.

Limit order: Gap up can result in an unexpected higher price.

Bottom line

Many factors can affect trade executions. In addition to using different order types, traders can specify other conditions that affect an order's time in effect, volume, or price constraints. Before placing your trade, become familiar with the various ways you can control your order. That way, you'll be much more likely to receive the outcome you're seeking.