It’s commonly used in cryptocurrency trading to automatically buy or sell a cryptocurrency once it reaches a certain price level. How Does a Stop-Limit Order Work?Ī stop-limit order is an advanced trading order that combines elements of a stop order and a limit order. The main difference between the two is that a limit order is used to specify the price at which you want to buy or sell, while a stop-limit order is used to specify the price at which you want to trigger a trade and the price at which you want to execute it. The limit price is the minimum amount you're willing to accept when selling or the maximum amount you're willing to pay when buying. On the other hand, a stop-limit order is an order to buy or sell a cryptocurrency when it reaches a specific price, known as the stop price, and then execute the trade at a limit price you set. If you place a limit order at the current market price, it will likely be filled within a few seconds (unless it's an illiquid market). Typically, traders place sell limit orders above the current market price and buy limit orders below the current market price. When you place a limit order, you are essentially specifying the maximum price you're willing to pay to buy a cryptocurrency or the minimum price for which you're willing to sell it. Stop-limit orders can be tactically positioned by integrating additional market indicators, such as the resistance and support levels.Ī limit order is an order to buy or sell a specific amount of cryptocurrency at a specified price. Once the trigger price is reached, a limit order will be placed automatically, even if the user is logged out. Stop-limit orders allow traders to set the minimum amount of profit they’re happy to take or the maximum amount they’re willing to risk on a trade. A stop-limit order combines a stop trigger and a limit order.
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