To avoid unnecessary losses on cryptocurrency trading, it can be a very good idea to set a Stop-Limit order on the exchange you're trading on. This post serves as a short guide and how-to explanation of how to set up a Stop-Limit order on the Binance Exchange.
Most people begin with trading Market orders or by setting Limit Orders where you can buy for market price or set up a specific price at which you're interested in buying or selling. A recently added extra feature is that of the Stop-Loss or Stop-Limit feature. The wording differs between exchanges, but Binance calls this feature a Stop-Limit order.
What is a Stop-Limit order
A Stop-Limit order will let you create a certain order which will only trigger when a certain price is met. For example, if you have recently bought into a new cryptocurrency and it's price goes up by 20% and you want to 'lock in' some profits you can set up a Stop-Limit order at 15% profit, which is 5% less than where it currently is at. If the price should then fall back down below the 15% profit threshold that you set, your Sell Limit Order will be placed on the Order book and trigger to avoid losing more of your profits. The 15% threshold that you created with the Stop-Limit order prevents you from that.Similarly, if you just bought in and want to protect your investment, you may set a Stop Limit order just below your buy-in price so that if the price should fall you can mitigate the damage and keep your losses to a minimum.
Stop-Limit on Binance
On the Binance Exchange you can find the option for the Stop Limit order on the Tab illustrated below. It will take you to the screen shown on the picture below:There are three parameters that we need to enter:
- The 'Stop' price
- The 'Limit' price
- The amount of tokens we want to sell
For the Stop Price: Under Stop price we enter the price at which we want our Limit order to appear on the orderbook.
For the Limit Price: Under Limit price we enter the price at which we actually want to sell our token.
For Amount: For amount, we simply enter how many tokens we wish to sell.
The Stop-limit order allows for a lot of flexibility. You can also use the same mechanism to buy. Perhaps you are waiting for a crypto to break out of a channel. You could then identify at which price you consider it a buying opportunity, and then set a buy price at the break-out level. Similarly, if your investment trends downward you can automatically react to it through the Stop Loss.
For newcomers it can be hard to figure out what to enter in each field for the Stop-Limit order, and so I made this short guide in the hopes that it will help somebody out and make it a little more clear.
Especially with Bitcoin going up and down it is usually quite easy to recognize critical support levels. When the BTC value goes down, Stop-Limit orders let you sell when the support breaks and buy back in at a lower support at the same time.
I hope this helps some of you. Happy trading (and merry Christmas)!
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A stop-limit order will be executed at a specified (or potentially better) price, after a given stop price has been reached. Once the stop price is reached, the stop-limit order becomes a limit order to buy or sell at the limit price or better.
Explanation of SL (stop-limit) mechanics:
Stop price: When the current asset price reaches the given stop price, the stop-limit order is executed to buy or sell the asset at the given limit price or better.
Limit price: The selected (or potentially better) price that the stop-limit order is executed at.
Quantity: The quantity of assets to buy or sell in the stop-limit order.Example:
The last traded price of BNB is 18.4 USDT, and the resistance is around 18.30 USDT. If you think that the price will go higher after the price reaches the resistance, you can put a Stop-Limit order to automatically buy more BNB at the price of 18.32 USDT. This way you won’t have to continuously watch market movements waiting for the price to reach your target price. Approach: Select “Stop-Limit” order, then specify the stop price to be 18.30 USDT and the limit price to be 18.32 USDT. Then click the button “Confirm” to submit the order.
What do "Maker" and "Taker" mean on Binance
Taker:When you place an order that trades immediately, by filling partially or fully, before going on the order book, those trades will be "taker" trades. Trades from Market orders are always Takers, as Market orders can never go on the order book. These trades are "taking" volume off of the order book, and therefore called the "taker." Limit IOC and Limit FOK orders (accessible via the API) are also always Takers, for the same reason.
Maker:
When you place an order that goes on the order book partially or fully (such as a limit order placed via the trading screen on binance.com), any subsequent trades coming from that order will be as a “maker.” These orders add volume to the order book, helping to "make the market," and are therefore termed the "maker" for any subsequent trades. Note: It is possible for a Limit GTC order (accessible via the API) to have traded as the taker and maker.
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How to Use OCO (One-Cancels-the-Other) Order Type on Binance
A One-Cancels-the-Other (OCO) is a pair of orders combining a stop-limit order and a limit maker order on the same side, with the same order quantity. When either one of the orders is executed (the stop price is triggered for stop limit order), the other one is automatically canceled. When either one of the orders is being canceled, in effect the entire OCO order pair is canceled.Price Restrictions:
For sell orders, the prices have to follow the following rule: Limit price of limit maker order Market price Stop price of stop-limit order. For buy orders, the prices have to follow the following rule: Limit Price of limit maker order e.g: If the last price is 10: A SELL OCO must have a limit price greater than 10, and the stop price lesser than 10. A BUY OCO must have the limit price lesser than 10, and the stop price greater than 10.Example:
You have 300 USDT in your account, and you think the overall trend of the BNB/USDT market is going up. You want to enter the market at a reasonable price. The last traded price of BNB is 28.05 USDT, and the resistance is around 29.50 USDT. You want to buy BNB when it hits 27.00 USDT, but you also don’t want to miss out on the opportunity when the price breaks the resistance price. Therefore you can place an OCO order with a quantity of 10, which combines a limit buy order and a stop limit buy order. The price of the limit maker order is 27.00 USDT. For the stop limit order, the stop price is 29.50 USDT and the limit buy price is 30.00 USDT.Approach:
Select [OCO] in the drop-down box, then specify the limit price to be 27 USDT and the stop price to be 29.5 USDT and stop-limit price to be 30 USDT, with quantity as 10. Then click the button [Buy BNB] to submit the order.
To Query Existing Orders: Once orders are submitted, existing orders can be found and reviewed in [Open orders].
When orders are executed or discarded, your stop-limit order history can be found in [My 24h Order History].
How to Handle Order Problems ( Exceptions) on Binance
1. If your order has not been executed:
- Please check the selected order’s price in the open orders section and verify whether or not it has matched the counterparty order (bid/ask) with this price level and volume.
- If you would like to expedite your order, you can consider canceling it from the open orders section and submitting a new order with a more competitive price. For quick settle, you may also consider using market order.
2. If you’ve encountered other issues, like inability to cancel your orders or coins not being credited to your account after a successful trade, please contact our Customer Support team and provide screenshots that’ll document:
- The order details;
- Error code or exception message
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