Namaste Tribe!
A Stop-Limit Order allows you to automatically place a limit order when the market reaches a specified price. It can help you manage trading risks, protect profits, and limit potential losses.
Watch the video below to understand how Stop-Limit Orders work:
How Does a Stop-Limit Order Work?
To place a Stop-Limit Order, you need to specify the Stop Price, Limit Price, and Order Quantity.
| Term | What It Means |
|---|---|
| Stop Price | The price that triggers your limit order. |
| Limit Price | The price at which your order is placed in the Order Book. |
| Order Quantity | The amount of cryptocurrency you want to buy or sell. |
When the market reaches the Stop Price, a limit order is automatically placed at your specified Limit Price.
How to Place a Stop-Limit Order on WazirX?
Follow these steps on the WazirX website or mobile app:
| No. | What You Need to Do |
|---|---|
| 1 | Go to the Buy/Sell section and select Stop Limit from the order type dropdown. |
| 2 | Enter your Stop Price to specify when the order should be triggered. |
| 3 | Enter your Limit Price at which the order should be placed. |
| 4 | Enter the Order Quantity. You can also use the available percentage buttons to select an amount. |
| 5 | Click or tap Place Order. |
How Should I Set the Stop Price and Limit Price?
The Stop Price and Limit Price can be the same. However, setting different prices may increase the chances of order execution.
| Order Type | Suggested Price Setting |
|---|---|
| Buy Stop-Limit Order | Set the Stop Price lower than the Limit Price to allow your buy order to match with available sell orders up to your specified limit. |
| Sell Stop-Limit Order | Set the Stop Price higher than the Limit Price to allow your sell order to match with available buy orders at or above your specified limit. |
Can You Share Examples of Stop-Limit Orders?
Example 1: Buy Stop-Limit Order
You want to buy Litecoin (LTC) when its market price reaches $50, but you do not want to pay more than $52.
- Stop Price: $50
- Limit Price: $52
When LTC reaches $50, a buy limit order is placed at $52. It can match with available sell orders priced at $52 or lower.
Example 2: Sell Stop-Limit Order
You want to sell LTC when its market price reaches $70, but you do not want to sell below $65.
- Stop Price: $70
- Limit Price: $65
When LTC reaches $70, a sell limit order is placed at $65. It can match with available buy orders priced at $65 or higher.
Does a Stop-Limit Order Guarantee Execution?
No. Reaching the Stop Price only triggers the placement of your limit order. Execution depends on market prices and available liquidity.
If sufficient matching quantity is unavailable or the market moves quickly beyond your Limit Price, your order may remain partially executed or unexecuted in the Order Book.