What is a trailing stop limit order?
Understanding Trailing Stop Limit Orders in Cryptocurrency Trading
A trailing stop limit order is a type of order that combines the features of a trailing stop order and a limit order. A trailing stop limit buy order is an order to purchase a cryptocurrency when it reaches a certain price, and a trailing stop limit sell order is an order to sell a cryptocurrency when it reaches a certain price.
A trailing stop order is an order to buy or sell a cryptocurrency when it reaches a certain price, which is set at a certain percentage or dollar amount below or above the market price. For example, a trailing stop limit sell order for bitcoin at a $100 trailing stop with a limit price of $9,500: This order would be triggered if the price of bitcoin drops $100 from the highest price it has reached since you placed the order. 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.
A trailing stop limit buy order for bitcoin at a $100 trailing stop with a limit price of $10,500: This order would be triggered if the price of bitcoin increases $100 from the lowest price it has reached since you placed the order. Once the order is triggered, it becomes a limit buy order at $10,500, meaning that the bitcoin will only be purchased if the market price is $10,500 or lower.
Trailing 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.
Pros of a trailing 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.
- Automatically adjust the stop price as the market price of the cryptocurrency moves in your favor.
Cons of a trailing 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 trailing stop limit orders as the price of the cryptocurrency changes.
How do I place a trailing stop limit order on Ndax?
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- 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 trailing stop limit order, click the TRAILING STOP LIMIT button.
- In the ORDER SIZE field, enter the amount of cryptocurrency you want to buy or sell.
- In the TRAILING STOP field, enter the dollar amount or percentage at which you want the order to be triggered. For example, if you want the order to be triggered if the price of the cryptocurrency drops $100 from the highest price it has reached since you placed the order, enter $100.
- 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 trailing stop limit order.
To learn more about Trailing Stop Market Orders, check out our blog:
Advanced Trading: Bitcoin Trailing Stop Market Order