A Sell Limit Order is an order placed above the current market price.
That order will only trigger if the price were to reach that level.
The exact opposite is a Buy Limit Order.
So you might be wondering:
“How does a Sell Limit Order work?”
Let’s say you want to go short on EUR/USD.
The exchange rate is now 1.1234.
But you think that you can short at a higher price later.
So, what do you do?
You’ll set a Sell Limit Order at a price higher than 1.1234.
Take for example 1.2200.
The Sell Limit Order will be triggered if EUR/USD reaches 1.1200 or higher.
For instance, Facebook’s share price is $1,000.
But you think it’s not over-valued enough to short sell it now.
So you’ll set a Sell Limit Order at $1,100 and be in the trade when the share price rises a little.
Fairly simple, right?