Post from a while back, so prices are lower than current.
Stealing shares from uneducated retailer investors using the biggest scam in the industry, STOP LOSS LIMIT ORDERS.
They simply don't work as advertised. If the market really has the bottom fall out, most likely only 10%-20% of a Stop Loss Limit Order will actually get sold when initially hit, while the remainder (most) of the order will sit unsold as a limit sell order while the stock tanks.
i.e. I will use my beloved NVA. Closed at $7.70 Friday. Markets are a bit jittery. Retailer owns 30,000 shares and decides to put in a Stop Loss Limit Order at $7.25 Monday before open. He figures, be smart and put it well below $7.70.
Scary headlines pre-market DOW futures down 500 plus, and stock quickly falls to $6.99 on the open. On a good day, chances are only a small fraction of the 30,000 shares get sold at $7.25, say 5,000 if lucky (today zero as it opened lower than $7.25). So, the balance of 25,000 convert into a Limit Sell Order at $7.25. This works similar if 10 small retailers each had 3,000 shares. Maybe 1 or 2 guys get all 3,000 sold, while the other 8 still have all their shares.
Two scenarios, one, the market really is in big trouble and NVA drops bigtime below $6.00 or even lower to $5.00 and stays low for months or longer. What good did the Stop Loss Limit Order do? Nothing really, he still owns the bulk (25,000 of 30,000) of the shares. They are sitting there as a Limit Sell Order at $7.25. So there was little to no real protection. Retailer loses.
Second scenario, the Stop Loss Limit Order really is a scam to steal shares, as the stock quickly rebounds back up toward $7.70 soon after. (closed at $7.68!!) Guess what, the remaining 25,000 shares do get sold, but on the way back up from the $6.99 low, as the converted Limit Sell Order at $7.25. Result, retailer ends up selling all 30,000 shares at $7.25 while the stock moved back towards $7.70, and goes up from there to new 52 weeks highs in the following days, weeks, and months to $9.00, $10.00, $11.00. Again, retailer loses.
No matter how you slice it, the retailer loses. Either from no real protection from a drastic and prolonged drop in share price, or stolen shares from a sudden overreaction drop and quick rebound.
NEVER EVER USE STOP LOSS LIMIT ORDERS!!
P.S. Not to be confused with Stop Loss Orders, which convert to a market order, not a limit order. I believe they have been banned in Canada for some time now, as they exacerbate a stock down in a tanking market, and trigger more Stop Loss Orders and so on downward.