What is a stop-limit order?
A stop-limit order is a market order that has both a stop price and a limit price. When the stop price is reached, it triggers the limit order. The limit price is the specific price of the limit order the stop price triggers.
Once your stop price has been reached, the limit order is immediately placed on the order book.
The stop and limit prices can be the same. However, it’s recommended for sell orders to set your stop price (trigger price) slightly higher than the limit price. The price difference allows for a safety gap in price between the time the order is triggered and when it is fulfilled.
For buy orders, set your stop price slightly lower than the limit price. This will also reduce the risk of your order not being fulfilled.
SL (stop-limit) terms and mechanics
Stop price: When the asset’s price reaches the given stop price, the stop-limit order is executed to buy or sell the asset at the given limit price or better.
Limit price: The selected (or potentially better) price that the stop-limit order is executed at.
Quantity: The quantity of assets to buy or sell in the stop-limit order.
Worked Example
The last traded price of TCH is 0.0000098BTC, and you feel that there is resistance around 0.000015BTC.
If you think that the price will go higher after the price reaches the resistance level, you can put a Stop-Limit order to automatically buy more TCH at the price of 0.000015BTC. This way, you won’t have to continuously watch market movements waiting for the price to reach your target price.
How to create a stop-limit order
Continuing with our example, we will look at exactly how you can make a stop-limit order
1. Select [Stop-limit], fill in the details of your stop price (trigger price), limit price for the triggered limit order, and the amount of crypto you wish to purchase. Click [Buy TCH] to confirm the details of the transaction.
In this example, set the stop price is 0.000015BTC and the limit price is 0.000151BTC, the amount is 10000.
Once your orders have been submitted, existing ‘stop-limit’ orders can be found and reviewed in [Open Orders].
CoinTiger team
2020/8/26
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