What is a stop limit order?
Understanding Stop Limit Orders in Cryptocurrency Trading
A stop limit order is a type of order that combines the features of a stop order and a limit order. A stop limit buy order is an order to purchase a cryptocurrency when it reaches a certain price, and a stop limit sell order is an order to sell a cryptocurrency when it reaches a certain price.
When a stop limit order is triggered, it becomes a limit order, meaning that the trade will only be executed at the specified limit price or better. For example, if you placed a stop limit sell order for Bitcoin at $10,000 with a limit price of $9,500, your order would be triggered if the price of Bitcoin drops to $10,000 or lower. Once the order is triggered, it becomes a limit sell order at $9,500, meaning that the bitcoin will only be sold if the market price is $9,500 or higher.
Stop limit orders can be useful for traders who want to set specific price targets for buying or selling a cryptocurrency and have more control over the execution of their trades. However, it is important to note that stop limit orders may not always be filled, particularly if the market price of the cryptocurrency does not reach the specified stop price or if there are not enough buyers or sellers at the specified limit price.
Pros of a stop limit order:
- Allows you to set specific price targets for buying or selling a cryptocurrency
- It gives you more control over the execution of your trades by allowing you to specify the limit price at which your order will be filled
- It can help you to lock in profits or minimize losses
Cons of a stop limit order:
- It may not always be filled, particularly if the market price of the cryptocurrency does not reach the specified stop price or if there are not enough buyers or sellers at the specified limit price.
- It may require you to constantly monitor the market and adjust your stop limit orders as the price of the cryptocurrency changes.
How do I place a stop limit order on Ndax?
Desktop
- Go to the Ndax website (https://ndax.io/) and log in to your account.
- Once you are logged in, you will be taken to your dashboard.
- On the left-hand side of the dashboard, click the TRADE button.
- On the trade page, you will see a BUY and SELL button on the right side of the screen. If you want to buy cryptocurrency, click the BUY button. If you want to sell cryptocurrency, click the SELL button.
- To select the cryptocurrency/CAD pair you want to trade, click the small grey arrow in the upper left corner of the screen. From the dropdown menu, select the desired pair.
- To place a stop limit order, click the STOP LIMIT button.
- In the ORDER SIZE field, enter the amount of cryptocurrency you want to buy or sell.
- In the STOP PRICE field, enter the specific price at which you want the order to be triggered. This should be the minimum price you are willing to sell for a sell order or the maximum price you are willing to pay for a buy order.
- In the LIMIT PRICE field, enter the specific price at which you want the order to be filled. This should be the minimum price you are willing to sell for a sell order or the maximum price you are willing to pay for a buy order.
- Once you have entered the necessary information, click the PLACE BUY/SELL ORDER button to submit your stop limit order.
To learn more about Stop-Limit Orders, check out our blog:
Advanced Trading: Bitcoin Stop-Limit Order