What is Stop-Loss Order?

A stop order, also referred to as a stop-loss order, is an order to buy or sell a crypto once the price of the crypto reaches a specified price, known as the stop price. When the stop price is reached, a stop order becomes a market order.

A buy stop order is always placed above the market price and a sell stop order is always placed below the market price. 

When the stop price is triggered, a market order is submitted and it is executed as per the order book best Bid/Ask available at that time. 

Buy stop orders become market orders when the last traded price is greater than or equal to the stop price. 

For example: A buy (Long) stop order is placed above the market price at 3700.00, as in the below screenshot, and this order would trigger when the LTP is at or above 3700.00.

Sell stop order becomes market order when the last traded price is less than or equal to the stop price. 

For example: the sell (Short) stop order is placed at 3500.00, as in the below screenshot, and this would trigger if the LTP is at or below the stop price of 3500.00.

Here, if you are trading on S&R (Support and Resistance) levels, then you may use this order type for fresh opening positions to exactly catch the trend and place the order as per your strategy. 

If you already have a long position, then the stop loss is placed below the buy average price as per the risk capacity and vice versa in case of short position.

Quick Look and Summary:

Stop-Limit Order: 

A Stop-Limit order is an instruction to submit a buy or sell limit order when the user-input stop trigger price is penetrated. It has two components, stop price and limit price. 

When a trade has occurred at or through the stop price, the limit order is submitted/enters the market which is basically an order to buy or sell at a specified price or better.

Stop-Limit orders are entered with both stop price and limit price.

Buy (Long) Stop-Limit Order

For example: A buy (Long) stop limit order is placed with stop price as 2.500 since it is placed above the market price and the limit is placed at 2.450, as in the below example (screenshot). 

A stop-limit order to buy can be placed during the market upswing.

• For a stop-limit order to buy: stop price ≥ current market price.

Here, if you are trading on S&R levels, then you may place an aggressive limit which is equivalent to the stop or above stop price (in case of buy) where you may end up getting an execution at market level best Ask after the stop price is triggered.

Sell (Short) Stop-Limit Order

For example: A sell (Short) stop limit order is placed with stop price as 2.400 since it is placed below the market price and the limit is placed at 2.420, as in the below example (screenshot).

A stop-limit order to sell can be placed during the market downswing.

• For a stop-limit order to sell: stop price ≤ current market price.

Here, if you are trading on S&R levels, then you may place an aggressive limit which is equivalent to the stop or below stop price (in case of sell) where you may end up getting an execution at market level best Bid after the stop price is triggered.