A stop limit order is used by the trader to buy or sell a certain number of securities starting with a specified price. It can be used both to hedge a position (stop limit sell or stop loss order) and to establish a position upon reaching a price higher than the current price (stop limit buy order).
A stop limit order is characterized in that it has two price limits: the stop limit and the actual limit. It does not participate in trading until the predetermined stop limit has been exceeded (buy) or undershot (sell). Only then is the order automatically submitted as a “normal” limit order. Each limit order has a certain validity period during which the order can be executed. The permitted period of validity is up to 90 days and can be chosen freely. The default setting is 30 days.