A stop limit order is simply a limit order with a condition that must be met before it is added to the order book. Once the limit order is added to the order book, it will be executed at the limit price or better.
Binance stop limit order
A stop limit order is a great tool to have available when trading cryptocurrencies. It can help prevent major losses and also secure an entry-point you are comfortable with. This guide will go over how to place a Binance stop limit order, but the process should be very similar on other exchanges.
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Placing a Binance Stop Limit Order
1. Go to the Binance website and login
2. Go back to the homepage and pick the market you want to trade in. For this example, I will be using the BTC Market. The following steps are the same for each market, but there might not be as many trading pairs.
3. Choose the pair you want to place the Binance stop limit order for. For this guide I went ahead and clicked NEO/BTC (top screenshot) and it took me to the NEO/BTC trading screen (bottom screenshot).
NOTE: If you are new to trading this screen can be somewhat intimidating. I will have a separate post that outlines each section on this screen.
4. Now we can place a stop-limit order for NEO. There is a “Buy” and “Sell” version, so both are covered below.
The “Buy” stop limit is used when you expect a breakout if it goes over a certain price. Let’s say NEO is hanging at just under 0.01 BTC and we expect it to skyrocket if it goes over 0.01 BTC. We could place a “Buy” stop limit order to purchase NEO at 0.012 BTC if it hits 0.011 BTC (screenshot below). If NEO hits 0.011 BTC (our STOP), Binance will add a limit order for us to purchase NEO at 0.012 BTC (our LIMIT). This is like a regular limit order, except it is meant to catch an upswing after resistance is broken. A normal “Buy” limit order would be used to catch a down swing when support is broken.
The “Sell” stop limit is used when you want to protect yourself against a loss. Let’s say we purchased 100 NEO at 0.008 BTC each. NEO is hovering just below 0.01 BTC, and we expect it to tank if it can’t break through 0.01 BTC. We could place a “Sell” stop limit order to sell our NEO at 0.0075 BTC each if it hits 0.0079 BTC (screenshot below). If NEO hits 0.0079 BTC (our STOP), Binance will add a limit order for us to sell our 100 NEO at a price of 0.0075 BTC (our LIMIT) per NEO. This is like a regular limit order, except it is meant to exit our position before a larger downturn. A normal “Sell” limit order is meant to lock in profits at a target price.
5. After entering the details for your order, just click the “BUY/SELL NEO” button and that’s it. You can go to the “Orders” tab and select the “Open Orders” option to see the status of your current stop limit orders.
Knowing how to place a Binance stop limit order is great knowledge to have. It can help you sleep easy if you are worried about missing out on an upswing or paranoid about a downswing. Note that in heavily volatile market conditions a stop limit order may not always work as planned. It is possible for things to ‘gap down’ or ‘gap up’ and while the stop will be triggered, the limit order it executes may not be. Check out this overview of CoinTracking to keep track of your cryptocurrency portfolio and tax reporting!