What is a Stop Limit and Stop market order and how do I place one?
Summary
A Stop Limit order lets you automate buying or selling crypto at a predefined price. It includes two prices: a trigger price, which triggers the order, and a limit price, which sets the maximum or minimum price for execution. This article explains how Stop Limit orders work, and the difference between Stop Limit and Stop Market orders.
What is a Stop Limit order?
A Stop Limit order helps you control your trades by setting two prices:
- Trigger price: The price at which the order is activated.
- Limit price: The maximum price (for buying) or minimum price (for selling) at which the trade will be executed.
Once the trigger price is reached, the limit order is placed. The order will only execute if the market price stays within your limit price.
Stop Limit vs. Stop Market Orders
It is important to understand the difference between a Stop Limit order and a standard Stop Market order (often referred to simply as a Stop Loss).
Stop Limit Order (Price Certainty)
- How it works: When the trigger is hit, a Limit order is placed.
- Pro: You control the exact price you pay or receive.
- Con: In a fast-moving market, your order might not be filled if the price skips your limit.
Stop Market Order (Execution Certainty)
- How it works: When the trigger is hit, a Market order is placed.
- Pro: Your order is guaranteed to execute immediately.
- Con: You do not control the exact execution price. You may experience slippage, where the final price is lower (selling) or higher (buying) than expected.
Using Stop Limit Orders (Limit Execution)
These orders are best when you want to be specific about the price.
Stop Loss Limit order (to limit losses)
A Stop Loss Limit order helps minimize losses by setting a predefined selling price.
- Trigger price: When this price is reached, a limit sell order is triggered.
- Limit price: The lowest price at which you are willing to sell.
Example:
You've bought Bitcoin at €30,000 and want to limit your losses.
- Trigger price: €28,000
- Limit price: €27,500
If Bitcoin drops to €28,000, a limit sell order is placed at €27,500.
Take Profit Limit order (to lock in profits)
A Take Profit Limit order helps secure profits by selling at a higher price.
- Trigger price: When this price is reached, a limit sell order is triggered.
- Limit price: The minimum price at which you want to sell.
Example:
You buy Ethereum at €2,000 and want to lock in profits.
- Trigger price: €2,500
- Limit price: €2,550
When Ethereum reaches €2,500, a limit order is placed at €2,550.
Using Stop Market Orders (Market Execution)
These orders are best when you want to ensure you get out (or in) quickly, regardless of the exact price.
Stop Loss Order (Market)
A Stop Loss (Market) order ensures you exit a position immediately when the price drops to a certain level.
- Trigger price: When this price is reached, a Market sell order is triggered immediately.
- Execution: The order is executed at the best available market price at that moment.
Example:
You bought Bitcoin at €30,000.
Trigger price: €28,000
If Bitcoin drops to €28,000, the system immediately sells your Bitcoin at the best available price.
Take Profit Order (Market)
A Take Profit (Market) order ensures you lock in profits immediately once the price hits your target.
- Trigger price: When this price is reached, a Market sell order is triggered immediately.
- Execution: The order is executed at the best available market price at that moment.
How do I place a Stop Limit order?
Follow these steps to set a Stop Limit order on Bitvavo:
- Log in to your Bitvavo account.
- Switch to Pro Mode.
- Select the desired market (e.g., BTC/EUR).
- Choose Buy or Sell.
- Select Stop Limit (or Stop Market) as the order type.
- Enter the following details:
- Trigger price: The price at which the order is triggered.
- Limit price: The price at which the trade is executed (if using Stop Limit).
-
Amount: The quantity of crypto you want to trade.
Tip: If using Stop Limit, set a small gap between your trigger price and limit price. This increases the chance of execution, especially in volatile markets.
- Preview the order and then confirm to place it.
Your order is now set and will appear in your Open Orders.
How do I place a Stop Market order?
Stop market orders are now available in Bitvavo Pro on Web. Follow these steps to place one:
- Go to Bitvavo Pro on Web.
- Select the asset you want to trade and at the top, choose "Stop Market" as the order type.
- Fill in the trigger price and the amount you want to buy or sell.
- Place the order.
When the trigger price is reached, a market order will be executed.
Frequently asked questions
What happens if my limit price is not reached?
If the market price does not reach your limit price, the order remains open. You can manually cancel or adjust it.
When should I use a Stop Limit vs. a Stop Market order?
- Use Stop Limit if the specific price is most important to you and you are willing to risk the order not filling.
- Use Stop Market if executing the trade is the priority, regardless of the exact price.
What is the difference between a trigger price and a limit price?
The trigger price triggers the limit order, while the limit price is the price at which you want to buy or sell.
How do Stop Limit orders work during rapid price movements?
In volatile markets, the price can move past your limit price too quickly, preventing execution.
- If you prefer Stop Limit, increase the gap between your Trigger and Limit prices.
How do I cancel a Stop Limit order?
Go to your Open Orders section and click "Cancel" next to the relevant order.
Was this article helpful?