BTC Markets is pleased to introduce Stop Limit Orders, a new advanced order type, now available on our exchange platform.
Volume: The amount of cryptocurrency being bought or sold.
Stop: A price condition, which once met, places a trade to buy or sell
Price/Limit: The upper or lower limit the volume will continue to be bought or sold until passed.
What is a Stop Limit Order
A Stop Limit Order allows a trader to automatically place a ‘Limit Order’ in the order book once the ‘Stop’ price has been met. This Limit Order will execute at the market price until either it is fully matched or the market price moves beyond the Limit Order.
Stop Limit Orders allow traders to place orders automatically when the price conditions are met.
How to place a Stop Limit Order
1.) In the Volume field enter the amount being bought or sold.
2.) In the Stop field, enter the price at which the Stop is activated.
3.) In the Price field, enter the limit that you want the order to continue to execute until passed.
4.) Select ‘Sell BTC’ or ‘Buy BTC’ and review the order.
5.) Once the order has been evaluated and the conditions of the stop limit order understood, select ‘Confirm’ to place the stop limit order.
NB.) You can cancel a Stop Limit Order by hitting the cancel button to the left of the open order section. Please note, you can only cancel unmatched parts of an order.
Example: Alex purchased 1 Bitcoin at $9,000 and wants to set a Stop Limit Order for the following condition; If the price reaches $8,700, sell 1 Bitcoin at $8,600.
Once Alex has confirmed the order it will appear in the open orders as a stop limit.
A day later, the price has dropped to $8,700. The above condition or ‘stop’ has been met and the Limit Order to sell 1 Bitcoin for $8,600 has been placed in the order book. The open orders table will now reflect that the order type has changed from a Stop Limit to a Limit order and it will have a ‘placed’ status.
The order will now act like any other limit order in the order book and will execute depending on where the market moves.
Alex’s Limit Order will be matched to the current market price if there is sufficient liquidity in the order book on the buy side. This will continue until either the order is fully matched or the market price moves below the Limit Order price.
If the price plummets below $8,600 without being fully matched any of the remaining order will not execute until the price moves back above $8,600. The lower a Limit Order is placed below a Stop the more room it has to be matched.
Why we chose Stop Limit as the first Stop Order type
There are many types of stop orders, Stop Limit orders are the first of many advanced orders types on the BTC Markets platform.
Stop Limit orders allow greater control than Stop Loss orders, allowing traders to define a limit to which they wish to sell. When a Stop Limit order is triggered, a Limit Order is placed in the order book and it will act like any other Limit Order, which will be matched or partially matched based on the available orders in the order book at that time. If the market price falls below your limit, your Stop Limit order may not be fully matched.
Stop Loss is another well-known stop order type, and is a fundamentally a market order triggered at a stop price. This means that the once the stop price is met, the order will continue to sell until it has been fully matched or there are no more buy orders in the Order Book. This means, depending on market liquidity, there is potential for a series of cascading Stop Loss orders to cause traders to inadvertently sell far below their desired stop price.
Stop Limit Orders offer you an enhanced trading experience but as always, please trade safely, and if you have any questions don’t hesitate to reach out to our Support Team.
Thanks as always,
The BTC Markets Team