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What is The Stop-Limit Function and How to Use It

2017-12-11 10:53
What is a stop-limit order?
A stop-limit order is a limit order that has a stop price. When the stop price is reached, it triggers the limit order. The limit price is the specific price of the limit order the stop price triggers.
Once your stop price has been reached, the limit order is immediately placed on the order book.
The stop and limit prices can be the same. However, it’s recommended for sell orders to set your stop price (trigger price) slightly higher than the limit price. The price difference allows for a safety gap in price between the time the order is triggered and when it is fulfilled.
For buy orders, set your stop price slightly lower than the limit price. This will also reduce the risk of your order not being fulfilled.
Please note that after the market price reaches your limit price, your order will be executed with the logic of a limit order. If you set your stop loss limit too high or your take profit limit too low, your order may never be filled because the market has not reached the limit price you set.
SL (stop-limit) terms and mechanics
Stop price: When the asset’s price reaches the given stop price, the stop-limit order is executed to buy or sell the asset at the given limit price or better.
Limit price: The selected (or potentially better) price that the stop-limit order is executed at.
Quantity: The quantity of assets to buy or sell in the stop-limit order.
Worked Example
The last traded price of BNB is 498 BUSD, and you feel that there is resistance around 500 BUSD.
If you think that the price will go higher after the price reaches the resistance level, you can put a Stop-Limit order to automatically buy more BNB at the price of 502 BUSD. This way, you won’t have to continuously watch market movements waiting for the price to reach your target price.
How to create a stop-limit order
Continuing with our example, we will look at exactly how you can make a stop-limit order
1. Select [Stop-limit] from the trading view to begin making your order.
2. Fill in the details of your stop price (trigger price), limit price for the triggered limit order, and the amount of crypto you wish to purchase. Click [Buy BNB] to confirm the details of the transaction.
In our example, the stop price is 500 BUSD and the limit price is 502 BUSD.
3. Double check your stop-limit order carefully before finally clicking confirm to submit it to the exchange.
View existing stop-limit orders
Once your orders have been submitted, existing ‘stop-limit’ orders can be found and reviewed in [Open Orders]. You can find this tab at the bottom of the trading view page.
When orders are executed or discarded, your stop-limit order history can be found under [Order History].