A Stop Order (also referred to as a stop-loss), is an order placed to buy or sell an asset once the price of the asset reaches a specified price (known as the stop price). When the stop price is reached, a stop order becomes a market order. A buy-stop order is entered at a stop price above the current market price.
In short, a stop order will trigger an order when an asset reaches a specific price. On the Coinmetro Exchange platform, you can use a stop order to sell an asset if it drops below a certain price, or buy an asset if it moves above a certain price.
When are Stop Orders useful?
An example of when a stop order could be useful is when chart analysis suggests a strong support level at a certain price. By placing a sell order at a price point below the support level, you can protect yourself against further loss, in case the support would break.
How to Enable Stop Orders
To enable the stop order option in the Exchange platform, advanced features must be enabled on the Exchange Platform, or in the Settings menu for Margin.
The Order Form for Stop Orders
To explain the order form for a stop order, the first field to look at is the Stop Price. In the example below, the stop price has been set to 1 EUR for XCM. This means that once XCM reaches the price of 1EUR, either a market or limit order will be triggered.
How to Execute a Market Stop Order
The first way you can utilize a stop order is to execute a market order when your stop price is reached. To do this, all you need to do is input the Stop Price, enable Immediate Order and place your order.
With the Partial Fill box checked, your order will be executed as Immediate-or-Cancel. If any portion of your order isn't filled, it will be canceled.
With the Partial Fill box unchecked, your order will be executed as a Fill-or-Kill market order. If your whole order can't be filled, it will be canceled.
Please note that market orders will generally be filled entirely at a fair market price on most of our available pairs. However, we advise you to always combine your Stop Price with a Max/Min (depending on if you are buying or selling) price, to protect you in case there are no orders available near your stop price, which otherwise might cause your market order to be executed at a loss.
How to Execute a Limit Stop Order
By setting a Max Price (when buying) or Min Price (when selling) together with your stop price, your stop order will execute a limit order once your stop price is reached.
Without Immediate Order selected, it will place a limit order into the book at the specified price, which will remain until filled or canceled.
With a limit price set, the Immediate Order option should not be ticked. If this option is selected, it will execute as a market order up to your limit price. The Stop Price is at what price point your order will be executed.
Coinmetro’s Demo Platform is always available if you would like to practice without risk. Please note that this article is not to be seen as trading or financial advice. It is for educational purposes only.