On Binance trades, the Stop Order is a combination of stop-loss and take-profit orders. Based on the price level of the trigger price against the last price or mark price when the order is placed, the system will determine whether the order is a stop-loss or a take-profit order.
Any investment should have risk management as a component. Simply put, you want to make sure two things when you buy in an asset:
- When the price reaches a certain level, you will profit (Take Profit).
- If the price falls below a certain level, it’s time to exit the trade (Stop Loss).
You can manually track your assets’ performance. You’ll be able to determine whether to take earnings or cut your losses in this manner. This, however, is not the best approach to go about it because:
- You should always keep an eye on the charts and prices.
- It’s possible that you’ll be too preoccupied to notice price changes.
- Some orders may take a while to complete.
- To take profits or exit positions, you’ll generally need to recall your target pricing.
As a result, the more sensible approach is to automate these operations. To put it another way, if you buy any assets, you can establish “take profits” and “stop-losses” criteria, and the orders will be executed automatically once your asset reaches that levels.
What is Stop Loss Order?
In layman’s terms, a stop loss or stop-limit order is the most important order that can prevent you from significant losses when the no mercy crypto market plummets.
Binance users who are familiar with the exchange are aware that there are numerous sorts of orders available. The stop loss or stop-limit order is the most critical. It is the only type of order that ensures that its users are always protected from large price drops.
Traders and investors will construct a stop-loss plan to protect their money in order to reduce risk. A stop-loss order is triggered when the price of an asset falls below the trader’s stop price. The market order, which sells below the stop loss level at the next available price, would be executed.
At example, suppose you bought 10 Binance Coins (BNB) for $300 each, totaling $3000. You place a $250 stop-loss order. After a few days, the price of BNB falls below $250, and you open your open position. Your stop-loss order is automatically triggered at that point, closing your position at $249.95, resulting in a loss of $50.05 per BNB.
What is a Take Profit Order?
A take-profit order assures that a position is closed at or above a pre-determined price level. If the price of a cryptocurrency advances in the right direction to the take-profit level, the trade is closed for a profit.
Short-term traders frequently utilize take-profit orders because they are the most efficient way to complete a transaction and remove the human aspect from managing an open position.
You can modify the risk-to-reward ratio of each transaction by using a mix of stop-loss and take-profit tools.
How to Place a Limit Order with TP/SL on Binance?
On Binance, you can set both the take profit and stop-loss orders at the same time while placing a limit order.
By choosing [Limit], you may enter the order price and size. Then, to choose the [Take Profit] and [Stop Loss] prices, choose [Last Price] or [Mark Price]. Then either [Buy/Long] or [Sell/Short] to place your order.
The TP/SL tool is only available for open orders when utilizing the hedge mode.
You can check the orders placed under the [Open Orders] tab:
Click [View] in the [TP/SL] column to see order information.
When an order is triggered, you can add or alter the TP/SL for the entire position under the [Positions] tab.
The TP/SL will be immediately canceled once the position is closed.