You have previously opened a position buying £10/point of the December FTSE at 5650. Several days after opening the position the December FTSE is trading at 5563. You place an order to close your position by selling £10/point should the December FTSE reach 5610.
Is this a Limit or a Stop?
This is a Limit.
A Limit is an instruction to deal at a more favourable level than the current price. The current price is 5563 and you are leaving an order to sell at 5610. Selling at 5610 is more favourable than selling at 5563, and so it must be a Limit.
A common mistake for people unfamiliar with Stops and Limits is to look at the opening level of the position, 5650, and to view selling at 5610 as a Stop (as it is a worse level than the opening level). Had the order been left when the position was opened, when 5650 was the current price, then it would be a Stop. In the problem described, however, the opening level is actually irrelevant to determining whether the order is a Limit or a Stop, as it is not the current price.
Is this a Limit or a Stop?
This is a Limit.
A Limit is an instruction to deal at a more favourable level than the current price. The current price is 5563 and you are leaving an order to sell at 5610. Selling at 5610 is more favourable than selling at 5563, and so it must be a Limit.
A common mistake for people unfamiliar with Stops and Limits is to look at the opening level of the position, 5650, and to view selling at 5610 as a Stop (as it is a worse level than the opening level). Had the order been left when the position was opened, when 5650 was the current price, then it would be a Stop. In the problem described, however, the opening level is actually irrelevant to determining whether the order is a Limit or a Stop, as it is not the current price.
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