How to place stop loss order and take profit order


That’s orders in a nutshell. Of course, each of these two categories has different variations that vì chưng different things, depending on how you want khổng lồ trade. Curious? Read on.

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Signed up for an exchange, & wondering what all the different buttons do? Maybe you’ve sầu finished your rewatch of Wall Street, và you’re trying to better underst& how stoông chồng markets work?
In the following article, we’ll dissect orders: the instructions you send lớn an exchange to buy & sell assets. As we’ll see shortly, there are two main types: limit orders and market orders. However, these are merely qualities used lớn describe an assortment of commands. 
Market orders are orders that you would expect lớn exedễ thương immediately. Essentially, they say at the current price, vị x. Suppose you’re on, you want to buy 3 BTC, & Bitcoin is trading at $15,000. You’re happy paying $45,000 for the coins and don’t want to lớn wait for prices to lớn drop lower, so you place a buy market order.
Who’s selling the coins, you ask? We need khổng lồ look at the order book lớn figure that out. This is where the exchange keeps a big các mục of limit orders, which are simply orders that aren’t executed immediately. These might say something lượt thích at y price, vì x.

For the sake of this example, another user might have sầu placed an order earlier telling the exchange to sell 3 BTC when the price hits $15,000. So, when you place your market order, the exchange matches it with the book’s limit order.

Effectively, you haven’t created an order – instead, you’ve filled an existing one, removing it from the order book. This makes you a taker because you’ve taken some of the exchange’s liquidity away. The other user, however, is a maker because they’ve added lớn it. Typically, you enjoy lower fees as a maker, because you’re providing a benefit to the exchange.
The relationship between these two players is explored in more detail in Market Makers và Market Takers, Explained. Check it out if you want a better understanding of how exchanges work.

What you need lớn know about market orders

The basic kinds of market orders are buy & sell ones. You instruct the exchange lớn make a transaction at the best available price. lưu ý that the best available price isn’t always the current value displayed – it depends on the order book, so you could kết thúc up executing your trade at a slightly different rate.

Market orders are good for instant (or near-instant) transactions. That’s about it, though. Fees incurred from slippage & the exchange mean that the same trade would have sầu been cheaper if done with a limit order.

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Common types of orders

The simplest orders are buy market orders, sell market orders, buy limit orders, and sell limit orders. If you stuông xã solely to lớn these, though, you’d find yourself with a somewhat restricted trading experience. Instead, you can build on top of these khổng lồ take advantage of market conditions, whether in short-term or long-term setups.

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Stop-loss orders


A stop-loss is a type of market order that involves you setting an off-book instruction lớn sell at a specific price. As the name might indicate, it’s designed to lớn protect you from any significant losses. Ostensibly, this appears lớn be a limit order, since you set a price at which to sell instead of executing at market price. However, the order isn’t added to lớn the order book. The trading platkhung only converts it inkhổng lồ a market order when the trigger price is hit.

Stop-limit orders


Stop-limit orders are other good tools for limiting the losses you can incur on a trade. They’re a bit lượt thích the stop-loss orders we mentioned in the previous section, but they incorporate an extra step. If BTC was trading at $10,000 và you set up a sell stop-loss order at $9,990, you ensure that you’ll sell your holdings when the price dips by $10.

However, you may not get the exact price you want. A stop-limit combines the best of both worlds khổng lồ guarantee that you will. Taking our example of $10,000 BTC from above, you specify two parameters: a stop price và a limit price. Your stop price might be, for instance, $9,985. This tells the exchange to lớn then set up a limit order with the limit price you specify – say, $9,990. 

If the price recovers lớn that màn chơi, then you’ll sell your holdings for $9,990 or better. cảnh báo, however, that the order is only placed after the stop price is hit. You vày still run the risk of the price not recovering, in which case you have sầu no protection if it continues khổng lồ dip below $9,985.

One-cancels-the-other (OCO) orders


A “one cancels the other” (OCO) order is a sophisticated tool that allows you to combine two conditional orders. As soon as one is triggered, the other is canceled. If we take the BTC at $10,000 example, you could use an OCO order khổng lồ either buy Bitcoin when the price reaches $9,900 or lớn sell it when the price rises khổng lồ $11,000. One of these two will be executed first, meaning that the second one is automatically canceled.

What’s time in force?

Another important concept lớn understand when talking about orders is time in force. This is a parameter that you specify when opening a trade, dictating the conditions for its expiry.

Good ‘til canceled (GTC)

Good ‘til canceled (GTC) is an instruction stipulating that a trade should be kept open until it’s either executed or manually canceled. Generally, cryptocurrency trading platforms mặc định lớn this option. 

In stoông chồng markets, a common alternative is khổng lồ cthua the order at the end of the trading day. Because crypto markets operate 24/7, however, GTC is more prevalent.

Immediate or cancel (IOC)

Immediate or cancel (IOC) orders stipulate that any part of the order that isn’t immediately filled must be canceled. Suppose you submit an order khổng lồ buy 10 BTC at $10,000, but you can only get 5 BTC at that execution price. In that case, you would purchase those 5 BTC, & the rest of the order would be closed.

Fill or kill (FOK)

Fill or kill (FOK) orders are either filled immediately, or they’re killed (canceled). If your order instructed the exchange to buy 10 BTC at $10,000, it wouldn’t partially fill. If the entire order of 10 BTC isn’t immediately available at that price, it will be canceled.

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Closing thoughts

Mastering the types of orders is vital to good trading. Whether you want to lớn use stop orders lớn limit the potential for loss, or OCO orders to lớn plan for different outcomes simultaneously, being aware of the trading tools available lớn you is essential. 

Want khổng lồ know more about order types? Cheông xã out our Q&A platsize, Ask, where the community will answer your questions.