How Does a Sell Stop Order Work?
How does a sell stop order in crypto work? For traders, it means reasonable protection against unwanted losses and surely more control over their trades by setting a minimum price, but we’ll get to that soon enough.
That said, let’s have a closer look at what a sell stop order is and how it works!
Stop Order for Selling
A sell stop order is a tool that helps traders limit their downside risk when selling digital assets.
The trader sets a stop price and submits the sell stop order. When the asset reaches the stop price, the order is triggered to sell the asset. Yes, it sells automatically at the best available market price.
Sell Stop Order Example
A trader owns $30,000 worth of bitcoin (BTC), but s/he doesn’t want to lose more than $5,000 if the price drops down. S/he places a sell stop order at $25,000.
So if the market price falls to $25,000, the sell stop order will be triggered, and the trader’s coins will be sold at the next best available market price. If the stop price hadn’t been in place and the market price had gone down unexpectedly, we wouldn’t be able to know the worth of the investment after the drop.
How to Set up a Sell Stop Order
Sell stop orders are available on most crypto exchange platforms, meaning traders place them online.
To set up a sell stop order, you need to specify the stop price that triggers the market order, and, in some cases, also a time frame.
If no time frame option is available, the sell stop order remains in place until the stop price triggers it or the trader cancels it.
In one of our most recent articles, we looked at how to set up a sell stop order on the CoinMetro platform.
Get Started with the CoinMetro Platform
One of the best things about the CoinMetro exchange is that you can go demo before live.
This means that you use virtual funds to play around with them before trading live on your real account.
Why choose us? We don’t like to brag, but… okay, sorry, we lied. Here’s a list of why CoinMetro is one of the top players in the crypto industry – in a nutshell:
- CoinMetro is a licensed EMI agent. This license allows us to operate and offer third-party and payments in both crypto and fiat.
- We helped the capital market authority in Montenegro to create a regulatory framework for a sandbox, so we could sit in that sandbox and offer security assets.
- CoinMetro is registered with AUSTRAC in Australia.
- Our exchange is also a member of the FinCEN in the USA.
- We hold EU-issued licenses for fiat-crypto wallet services and crypto-crypto exchange.
- The CoinMetro team went so far as to actually help the Estonian government rewrite laws around the crypto licensing criteria to take the crypto market transparency to another level.
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