Advanced Trading: Stop-Limit Order
A stop-limit order is a limit buy or sell order that is triggered once a cryptocurrency touches an exact price. The advantage of this order is that you can ensure an exact price for the order, but like any limit order it may not execute if the price does not reach that level.
A stop-limit order requires setting two price points and setting a time-frame when the stop-limit order can be executed. The two price points include the stop price, which is the start of the specified target price of the trade. The second price point is the limit price, which is outside the price target of the trade. Buy stop-limit orders must be placed above the market price at the time of the order, while sell stop-limit orders are placed below the market price.
The biggest benefit of a stop-limit order is that the trader has a high-level of control over how they want an order to be filled. The biggest drawback when using a stop-limit order is that the trade is not guaranteed to be executed if the cryptocurrency does not reach the stop price during the specified time-frame.
An Example of a Stop Limit Order
- Assume that Bitcoin is trading at $10,000, and an investor wants to buy Bitcoin once it begins to demonstrate upward momentum. The investor has put in a stop-limit order to buy with the stop price at $10,500 and the limit price at $11,000.
- If the price of Bitcoin moves above the $10,500 stop price, the order is activated and turns into a limit order. As long as the order can be filled under $11,000, which is the limit price, the trade will be filled. If the price of Bitcoin rises above $11,000, the order will not be filled.
How to Place a Stop Order on NDAX
- Login to https://ndax.io/
- Once you log in you will be redirected to your dashboard
- Click TRADE on the left-hand side of the screen
- On the trade page, click BUY (Green button) or SELL (Red Button) on the right side of the screen
- Click the small GREY ARROW in the upper left corner of the screen to pick the CRYPTOCURRENCY/CAD pair
- Click the small GREY ARROW on the pop-up to display the dropdown list of Advanced trade orders.
- Click on STOP LIMIT
- ENTER ORDER SIZE
- ENTER LIMIT PRICE
- ENTER STOP PRICE (the specified price when the order will turn into a limit order
- Click PLACE BUY/SELL ORDER