Episode Summary

This episode untangles the mechanics and trade-offs of market, limit, stop-loss, and stop-limit orders. While a market order guarantees execution at the expense of price certainty, a limit order guarantees your price but carries no guarantee of execution. We expose the dangerous misconception that a stop-loss acts as a guaranteed price floor. In reality, a stop-loss is merely a trigger that converts into a market order once touched, exposing investors to severe slippage and massive losses during overnight market gaps.

We compare this with stop-limit orders, which become limit orders when triggered but risk never executing at all if the price gaps past your limit. To manage these structural limitations, Jane advises using position sizing rather than relying on stops, and warns long-term index investors ...