Test a stop order through a price gap
See this course’s project requirements
A fictional stock-literacy file with a quote card, checked order and gap cases, an accessible OHLC chart, a pattern counterexample and a reconciled paper-trade ledger.
Keep your working files in your own notebook or software. Save a private description, checklist, and work link in My Proof.
What to include
- A quote card with exact symbol, historical last price, best bid, best ask, spread, visible sizes and simulation limitations.
- An order comparison showing executed quantity, unfilled quantity, gross cost, weighted fill price, fee and total cash cost.
- A two-column gap comparison with trigger, resulting instruction, fill status, executed price, net cash and unsold shares.
- An annotated original candle chart, exact matching data table and period-3 range/body/wick calculation.
- A pattern note with numerical definitions, $49 three-period average, opposing continuations and a failed observed-support band.
- A complete fictional stock-literacy file with quote card, order/gap comparisons, accessible OHLC chart, pattern counterexample and reconciled two-order ledger.
Review and revise
Use these criteria to check your work and choose what to improve.
- Quote, order and ledger records use the exact supplied inputs, distinguish submitted/pending/filled states and reconcile all executed quantities.
- Money calculations show units, fees and intermediate steps; cash and shares agree with an independent calculation.
- The original chart has a matching table and labels; pattern notes retain contrary evidence and distinguish historical observations from forecasts.
- All six lesson outputs and changed-input results are included, with fictional assumptions and untested real-world behavior stated accurately.
Want more background?
The idea in everyday life
In a separate invented gap case, the paper learner already owns 10 shares. A sell stop is set at $49.50. The next recorded trade is $47.00, which triggers the stop under this case’s last-trade trigger rule. The next available buyer offers $47.00 for all 10 shares. No higher bid appears later in the exercise. One $1 fee applies to an executed order. Compare a sell stop with a sell stop-limit using stop $49.50 and limit $49.00. These are explicit exercise rules; actual brokers can use different trigger and timing policies.
A stop activates an instruction. A gap can skip prices; a limit can prevent a bad-priced fill while leaving the position unsold.
Test a stop order through a price gap — worked paper practice
A stop activates an instruction. A gap can skip prices; a limit can prevent a bad-priced fill while leaving the position unsold.
In a separate invented gap case, the paper learner already owns 10 shares. A sell stop is set at $49.50. The next recorded trade is $47.00, which triggers the stop under this case’s last-trade trigger rule. The next available buyer offers $47.00 for all 10 shares. No higher bid appears later in the exercise. One $1 fee applies to an executed order. Compare a sell stop with a sell stop-limit using stop $49.50 and limit $49.00. These are explicit exercise rules; actual brokers can use different trigger and timing policies.
Separate fictional gap inputs
Paste at A1.
| AField | BSupplied value |
|---|---|
| Owned shares | 10 |
| Sell stop ($) | 49.5 |
| Next last trade ($) | 47 |
| Next available bid ($) | 47 |
| Shares at next bid | 10 |
| Sell limit, stop-limit case ($) | 49 |
| Fee for an executed order ($) | 1 |
Copy as plain text
1. Check activation
Compare next last trade $47 with sell-stop threshold $49.50.
You should see: Triggered in this case because $47 is below $49.50.
A trigger rule is separate from the price a buyer offers.
2. Execute the modeled sell stop
After activation, use the supplied $47 bid for all 10 owned shares.
You should see: 10 × $47 = $470 gross.
A market instruction receives available prices; the stop is not a guaranteed fill price.
3. Reconcile cash and shares
Subtract the one $1 fee and record the remaining share count.
You should see: $469 net cash, 0 shares remaining.
A trade record reconciles quantities as well as money.
4. Test the stop-limit price
The stop-limit activates a $49 sell limit. Compare $47 bid with the required minimum.
You should see: The bid fails the $49 minimum; 0 shares execute and all 10 remain owned.
Price control can create nonexecution rather than a guaranteed sale.
5. State the limits
Record the omitted broker rules and unknown next market move.
You should see: No recovery, later fill or real account protection is established.
The exercise demonstrates a failure mode, not an optimal trading rule.
What to finish
A two-column gap comparison with trigger, resulting instruction, fill status, executed price, net cash and unsold shares.
Watch for this
Treating the words stop-loss as proof that every position can be sold at the selected threshold.
How can I tell I understand it?
Explain both the lower-priced market fill and the unsold stop-limit case without recommending an order for real money.
Quick knowledge check
Answer all 3 questions. Get at least 2 right and the lesson completes automatically.
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Pass the check. We’ll save the progress.
Answer all 3 questions above and get at least 2 right. You can review the explanations and try again.
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Sources and further reading
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Source & access notes · checked 2026-10-01
Inspected market/limit, partial execution, stop triggers and stop-limit nonexecution; specific policies vary by broker.
Access: Public official page inspected with the web reader on 2026-10-01; no broker tools or real transactions operated.
Reuse: Concept references only. All prices, records, charts, worked examples, exercises and questions are original fictional LifeStarter material; no source diagram or exercise copied.
Source & access notes · checked 2026-10-01
Inspected risks of loss and possible difficulty liquidating positions; no copied disclosure block or claim of FINRA approval.
Access: Public official page inspected with the web reader on 2026-10-01; no broker tools or real transactions operated.
Reuse: Concept references only. All prices, records, charts, worked examples, exercises and questions are original fictional LifeStarter material; no source diagram or exercise copied.
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