Advanced order types - Trailing Stop Loss and Stop Limit live on CoinDCX

We have added advanced order types - Trailing Stop Loss and Stop Limit to CoinDCX. Read to understand how to get started with these order types and book profits with more efficiency. 


Trailing Stop Loss


A Trailing Stop Order provides flexibility over Stop Loss Orders. A Stop Loss order protects the trader when market goes against their prediction, a Trailing Stop allows the trader to take advantage of market movement by executing Stop Loss at a price distance. This helps in protecting profits with market dynamics. 


Let's understand this better with an example:


If the trader is in a long position in the YOYO/BTC market, and entry price is 0.00000500 BTC. Trader sets up Trailing Stop Loss at 0.00000475 BTC. The percentage difference calculated by the exchange is exactly 5%. 

Now as the price of YOYO increases, the Stop Loss price increases. When YOYO/BTC is at 0.00000600 BTC, Stop Loss will be at 0.00000570, which is 5% below the market price. When the market price falls below 0.00000600 BTC, Stop Loss continues to remain at 0.00000570 and when it hits the Trailing Stop Loss price, the user books a profit of 0.00000070 BTC. 


Stop Limit 


A Stop-Limit order executes as a limit order within a specific price range (buy or sell limit price or better) and not as a market order. With a Stop-Limit, the trader sets a stop price at which the order is triggered and a Limit price at which the order is executed. The order executes only between the Stop and the Limit prices as long as matching bids or asks are available in the  order book. If the market price surpasses the Limit price, the order may not be entirely filled.


When the Stop price is hit, the Limit order is triggered and it starts reflecting in the order book. The order does not get triggered until the Stop price is hit. If the Stop price is hit, but the price doesn't hit the Limit price, the order does not get executed. 


Let's understand this better with an example:


Example: If a trader would like to buy BTC once the market price reaches $3800 , but not pay more than $3850, then a stop price of $3800 and limit price of $3850 will be specified at the same time using a stop-limit order. If the market price reaches $3800, the order is triggered and will match the best available asks up to $3850. If the market price moves to $3850.01 or above, then the order may go partially unfilled due to the limit price.


Login or Signup to post a comment