How to Set up a Sell Stop Order
Stop orders are order types that are triggered when a stock moves past a specific price point. If that happens, a stop order is converted into a market order that is executed at the best available market price.
This week’s focus term, sell stop order, is one of the stop order types used in trading when selling.
What is it and how to set it up?
Not Sure What a Sell Stop Order is?
A sell stop order, also referred to as a stop-loss order, is a selling order placed below the current market price. The order gets triggered as soon as the price reaches that level – a stop price set by a trader.
If the market price moves to the stop price, the sell stop order is triggered to become a market order that will be executed at the next – best – available market price.
A sell stop order helps traders minimize potential losses, especially, in volatile market conditions.
How to Set up a Sell Stop Order
Next, we’ll have a closer look at how to set up a sell stop order by the example of our very own CoinMetro exchange platform.
In the CoinMetro Exchange platform, you can use a stop order to sell an asset if the price drops below a certain point or buy an asset if its price moves above a certain level. However, the former is of our primary interest.
To enable the Stop Order option in the Exchange platform, Advanced Features must be enabled in the Settings menu, accessible via the cogwheel in the upper right section of your screen.
The Order Form for Stop Orders Explained
To explain the order form, the first field to look at is the Stop Price. This is a price, at which your order will be triggered and become a market or limit order.
Stop order to execute a market order
The first way you can utilize a stop order is to execute a market order when your stop price is reached. For that, all you need to do is input the stop price, enable “Immediate Order”, and place your order.
With “Allow Partial Fill” unchecked, your order will be executed as a “Fill-or-Kill” market order. If your entire order can’t be filled, it will be cancelled.
With “Allow Partial Fill” checked, your order will be executed as a “Immediate-or-Cancel”. Any portion of your order that wasn’t filled, will be cancelled.
NB! Please note that market orders will generally be filled entirely at a fair market price on most of the pairs available on our platform. However, we advise you to always combine your Stop Price with a Max/Min (depends on whether you’re buying or selling) Price, to protect you in case there are no orders available near your stop price, which otherwise might cause your market order to be executed with a loss.
Stop order to execute a limit order
By setting a Max Price (when buying) or Min Price (when selling) together with your stop price, your stop order will execute a limit order once the stop price is reached.
With a limit price set, the “Immediate Order” option is not required. If you select it, it will be executed as a market order up to your limit price.
Without “Immediate Order” selected, it will place a limit order into the book at the price, which will remain until filled or cancelled.
[x] Immediate Order (“Allow Partial Fill” unchecked)
A market order will be executed as a “Fill-or-Kill”. If the entire order can’t be filled, it will be cancelled.
[x] Immediate Order (“Allow Partial Fill” checked)
A market order will be executed as an “Immediate-or-Cancel”. Any unfilled portion of the order is cancelled.
[x] Min Price
Your asset will be sold at the best available price, but not below the specified price. The order will remain in the book until filled or cancelled.
[x] Min Price + Immediate Order (“Allow Partial Fill” unchecked)
Your asset will be sold at the best available price, but not below the specified price. If the entire order cannot be filled, it gets cancelled.
[x] Min Price + Immediate Order (“Allow Partial Fill” checked)
Your asset will be sold at the best available price, but not below the specified price. Any unfilled portion of the order is cancelled.
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