What is a Crypto stop order?
A stop order is an order to buy or sell a cryptocurrency once the price reaches a specific price, known as the stop price. When the stop price is reached, a stop order becomes a market order and is executed at the best available price (which can be lower or higher than the stop price).
Stop orders aren't guaranteed to execute until the price of the cryptocurrency reaches the set stop price.
How do buy stop orders work?
For a buy stop order, you place a threshold (or ‘stop’) on how much you’ll buy a cryptocurrency for. Your order triggers when the current price goes beyond your ‘stop price’. It may execute at a different price depending on fluctuations.
Example: Crypto X is currently trading at $5 per coin, but you want to buy as soon as the price rises to $6 per coin. This may be because you suspect that the price might rise and you want to buy the cryptocurremcy before the price increases. You would set your stop price to $6.
- If Crypto X's price increases from $5 to $6, your buy stop order will become a buy market order and your order will be executed at the best price available
- If Crypto X's price doesn’t reach $6, your order won't be triggered
How do sell stop orders work?
For a sell stop order, you place a threshold (or ‘stop’) on how much you’ll sell a cryptocurrency for. Your order triggers when the current price goes beyond your ‘stop price’. It may execute at a different price depending on fluctuations.
Example: Crypto X is currently trading at $5 per coin, but you want to sell as soon as the price goes below $4 per coin. You think the price might fall further and become less favourable to you. You set your stop price to $4.
- If Crypto X's price falls from $5 to $4, your sell stop order will become a sell market order and your order will be executed at the best price available
- If Crypto X's price doesn’t reach $4, your order won't be triggered
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