Sell Stop Order: All You Need to Know


Five of the most common trading order options include market, limit, stop, stop limit, and trailing stop orders. The more advanced a trader becomes, the more trade order entries they will use beside the most basic ones – buy and sell market orders.

In this article, we’ll be discussing the sell stop order: what is it and how do I use it?

Sell Stop Order: The Definition

A sell stop order is an order used when selling. This order type is placed below the current market price. Thus, the order gets triggered if the price reaches that level.

A stop price is always specified for sell stop orders. This means that a trader would specify a stop price to sell. If the market price moves to the stop price, the sell stop order is triggered. Should that happen, the sell stop order becomes a market order to be executed at the current market price.

A sell stop order is sometimes also referred to as a stop-loss order as it can be used to either help protect unrealized gains or minimize losses.

Sell Stop Order: A Practical Example

Examples always work better than just reading, right? So here’s one:

A crypto trader has bought $1,000 worth of bitcoin (BTC), but wishes to risk no more than $100 loss on the trade. They place a sell stop order at  $900.

If the market price falls to $900, then the sell stop order is triggered, and the trader’s coins are sold at the available market price.

Why You Should Use Sell Stop Orders

We know for fact that a sell stop order makes your life as a trader easier. By placing a sell stop order, you don’t have to be constantly watching the price, chasing it to avoid potential serious breakdowns.

As a result, trading becomes a much less stressful experience. Less stress reduces the emotional attachment to each trade – more success!

Related Potential Risks

Using sell stop orders doesn’t guarantee you profitable trades as stop orders aren’t without potential risks. Let us explain.

The price may go down in what is called a false breakdown. This means that instead of plummeting further, the price goes back up – just like that. However, your sell stop order has already been triggered, and the market order will be executed at the next available market price.

It’s worth noting that the potential risks are higher during the times of extraordinary market volatility.

Sell stop orders are shields that can help protect you against unwanted losses, but, at the same time, they may prevent you from winning big – occasionally.

More About Stop Orders

Our virtual help center provides in-depth answers to most crypto-related FAQs.

Find out more about what a stop order is and, specifically, how it can be used on the CoinMetro platform. Additionally, you can take a look at our educational article What is a Stop Order?

Finally, you may also find our blog post How Does a Crypto Exchange Work? interesting.

CoinMetro’s Demo Platform

Now that you’re familiar with sell stop orders, you may want to practice – without risk. We’ve got a solution for you!

CoinMetro’s demo platform is always available for that. On a demo platform, you will be given some virtual funds to play with. Feel free to virtually try our exchange before signing up to a real account.

The CoinMetro Exchange

CoinMetro grows at the speed of light. We don’t just make promises, but also deliver – and overdeliver.

A few years back, we entered the cryptoverse, wishing to revolutionize it with a never-before-created financial product that is transparent to the max. As a result, we’ve built a licensed crypto exchange that’s fully regulated and offers the absolute best customer experience in the industry.

Our Trustpilot score has reached 5.0*, which sure says a lot about who we are and what we do.

Accelerated by a rising crypto market, a supportive community, and an ever-expanding line of solutions, we’ve more than doubled revenue projections for Q1 2021. This translates into 100x growth in just a year. Can you believe it?

Trade Crypto with Us

The crypto market is boiling. The prices are going up, and new coins and tokens are issued at a whooping rate.

Bitcoin has just marked another record day by shattering its previous all-time high and marking a fresh one at $65,000!

A brand new trader? It’s not too late to make an entry, even if you’re not a pro and have no crypto-related background or knowledge.

If you are an advanced trader, CoinMetro is the exchange to explore – it’s full of techy discoveries to be made.

Open an account today to discover a wide range of the CoinMetro solutions, with many more coming soon, and the benefits the crypto market has to offer.