Stop Loss or Stop Limit are terms that we often encounter when participating in investing in the cryptocurrency market, especially in trading coins, traders often use Stop Limit orders to “take profits”, ” bottom fishing” or “stop loss”, usually cut loss to limit maximum risk when trading coins or playing forex, securities. Most major exchanges like Binance, Huobi, OKEx, Bittrex, Bitfinex, BitMex, Poloniex, etc. support stop limit orders.
Most of us today still often use buy / sell orders with the desired price and wait for the “match” order. However, this method still has many limitations, cannot be online regularly to monitor market price fluctuations and handle them in time, especially at times of strong fluctuations, prices BTC sometimes down to 10-15% in less than 1 hour, followed by Altcoins also decrease, now if you can’t track and do not place a stop loss order, you will suffer a heavy loss, even “burn the account”. Therefore, using stop loss is indispensable when trading coins, it helps you preserve capital and make better profits.
However, not everyone knows how to place a stop limit order and how to use it effectively. Today’s Post I Love Bitcoin Will join you to find out the command What is Stop-Limit? What is Stop Loss? And I will show you how to place stop limit orders on popular exchanges.
What is Stop Limit?
Stop Limit or rather Stop-Limit Order, is interpreted as command stop – limit, which is a combination of a limit order and a stop order. A stop-limit order will be executed at a specific price when the market reaches the stop price. Meaning when the market reaches the stop price, your order becomes a sell limit or buy limit order at a specific price or better.
Stop-limit order has the advantage of helping traders control exactly how their buy/sell orders will be executed. As a result, they can control the acceptable portion of profit or loss. However, in a volatile market like cryptocurrencies, if you do not know how to use the stop limit order properly, you can lose the opportunity to profit.
What is Stop Loss?
Stoploss order (S/L) is actually similar Stop Limit, but stop loss is only used for “stop loss” or “stop loss”, this is an order that professional traders or novice traders also need to know and must use when trading coins or trading forex, stocks. Stop Loss help limit losses, an indispensable capital preservation solution. Besides, the command Take Profit (take profit) is also commonly used.
Eg: You buy 1 BTC at $10,000 and expect the price to rise to $20,000 in the next 5 months. However, to hedge the risk that occurs when the market declines and BTC price can drop to $5,000, you would set Stoploss at $9,000, meaning when BTC price drops to $9,000, your sell order will automatically action, you have now stopped loss and accept a 10% loss equivalent to 1,000 USD. When placing a stop loss means that you accept a predetermined loss and no longer need to enter the market price every day, the order will be automatically executed if the market price hits the stop price.
Instructions for using Stop-Limit or Stop-Loss orders on exchanges
1. How to place a Stop Limit order on Binance exchange
Bnance currently the largest cryptocurrency exchange in the world by trading volume, and of course it also supports stop limit orders. Explain the information in the box place a stop limit order on Binance:
- Stop price (stop price): When the current price of the coin reaches the expected price, a stop-limit order is processed to buy or sell at the expected price or better.
- Limit price (expected price): The price (or higher price) when the stop-limit order is executed.
- Amount: The number of coins you want to buy or sell.
- Total: Total amount received or payable when the stop-limit order is executed.
A. Use Stop-Limit to buy coins on Binance (bottom fishing)
Stop Limit Orders can be used by traders to buy when they want.”bottom fishing“a certain coin. For example, BTC price is currently at $9,200, you predict BTC will correct down to $9,000 and then increase again, now you can use the stop-limit command to buy BTC at $9,001. You do the following:
Step 1: First you choose the trading pair BTC/USDT on Binance and then select the tab “Stop-Limit” => side of the “Buy BTC“Enter the information below as follows:
- Stop: 9000
- Limit: 9001
- Amount: Amount of BTC you want to buy
- Total: Total amount of USDT to pay to buy above amount of BTC
- When done, select “Buy BTC“
This order means that when BTC drops to $9,000, the exchange will automatically buy the amount of BTC you set at the price of $9,001.
- Note: Limit price must always be higher than Stop price, do not set limit price equal to or greater than stop price or this order will not be successful. Usually will set a little higher, like my example above for example.
Step 2: Select Next”Place Order” to confirm the buy order.
After placing an order successfully, this order will be displayed under “Open Order” and you can also cancel if you want to set another price again. Read on, I will explain below.
B. Use Stop-Limit to sell coins on Binance (Stop Loss)
Stop Loss nice stoploss This is the purpose that traders often use to stop-limit orders. For example, you just bought some BTC at $9,200 and you expect the price to go up to $10,000, but you’re still afraid the price might drop to $8,500 or lower, to limit your risk you can use stop loss to sell BTC if the price drops to $8,499. You place the order as follows:
Step 1: Go to the right of the “Sell BTC” and enter the following information:
- Stop: 8500
- Limit: 8499
- Amount: Amount of BTC you want to sell
- Total: Total amount of USDT to receive
This order means that when BTC drops to $8,500, the exchange will automatically sell the amount of BTC you set for $8,499.
- Note: Limit price must always be lower than Stop price, do not set limit price equal to or lower than stop price or this order will not be successful. Usually will set a little lower, like my example above for example.
Step 2: Choose “Place Order” to confirm the sell order.
After successfully placing a stop-limit order, these orders will be displayed under “Open Order“as below, if after the expected time, the price still does not reach your desired level, ie the order is not matched, you can cancel this order and place another order with a better price by selecting “Cancel“.
2. How to place a Stop Limit order on Huobi Global
For Huobi Global, the way to set stop loss is similar to Binance, almost no different. Select to tab “Stop-Limit” and then set up buy or sell parameters similar to Binance.
3. How to place a Stop Limit order on Bittrex
4. How to place a Stop Limit order on OKEx