How To Set A Stop Limit Orders

Published by Abdulmujeeb A. Owolabi on

You’ll probably need to utilize more than market orders if you want to start actively trading rather than HODL. A stop-limit order gives you additional flexibility and control. For newcomers, the concept of limit, stop-loss, and stop-limit orders can be complicated, so let’s go through the fundamental differences first.

What Is A Stop-Limit Order?

A stop-limit order combines the functionality of stop-loss and a limit order. Stop-limit orders allow traders to specify the minimum profit they’re ready to accept, as well as the maximum amount they’re willing to spend or lose on a trade. Even if you are logged out or offline, a limit order will be placed automatically whenever you establish a stop-limit order and the trigger price is achieved. Stop-limit orders can be intelligently placed by analyzing resistance and support levels as well as the asset’s volatility.

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The stop price in a stop-limit order is the price at which the exchange will place a limit order. The price at which your order will be placed is known as the limit price. The limit price, which is normally higher than the stop price for a buy order and lowers for a sell order, can be customized. Between the moment the stop price triggers and the time the limit order is placed, the market price changes.

How Does A Stop-Limit Order Work?

Breaking down a stop-limit order into components is the best way to understand it. The stop price is used to initiate a limit order. When the market reaches the stop price, a limit order with a specific price is automatically created (limit price).

Although it is possible for the stop and limit prices to be the same, it is not required. In fact, for sell orders, it’s safer to set the stop price (trigger price) a little higher than the limit price. You can set the stop price for buy orders a little lower than the limit price. This enhances the likelihood of your limit order being filled after it has been triggered.

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When A Stop-Limit Order Is Used?

If you wish to buy or sell an item but not at any cost, stop-limit orders are a smart option. If an asset is volatile or lacks liquidity, simply utilizing ordinary stop-loss orders (which trigger market orders) can result in you losing money or paying more than you intended. The stop-loss order will fill at the best available market price, which may be a price you don’t like.

With a sell stop-limit order, you may be certain that the price will not change from the one you specify. Stop-limit orders allow you to profit when the market rises while also allowing you to buy an asset when the market falls. Even if your limit order doesn’t always fill, you’ll always get the price you desire or better.

How To Place A Stop Limit Order

BNB’s most recent traded price is 498 BUSD, and you sense resistance around 500 BUSD.
You can use a Stop-Limit order to automatically buy more BNB at the price of 502 BUSD if you believe the price will rise once it reaches the resistance level. You won’t have to keep an eye on market movements while waiting for the price to reach your aim.

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Using our example as a guide, we’ll look at how to place a stop-limit order.

  1. Select [Stop-limit] from the trading view to begin making your order.

2. Enter the stop price (trigger price), the limit price for the triggered limit order, and the amount of cryptocurrency you want to buy. To confirm the transaction’s details, click [Buy BNB].

The stop price is 500 BUSD, and the maximum price is 502 BUSD in our example.

3. Double-check your stop-limit order before submitting it to the exchange by clicking confirm.

View the status of any existing stop-limit orders.

Existing’stop-limit’ orders can be identified and evaluated in [Open Orders] once your orders have been submitted. This button can be found at the bottom of the trading view page.

Your stop-limit order history can be seen under [Order History] after orders are executed or rejected.

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