A stop limit order is an order to buy or sell a security at a specified price or better, 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.
A stop limit order can be used to attempt to limit losses or lock in profits. For example, suppose you own shares of XYZ company stock that you bought at $50 per share. The stock is now trading at $100 per share and you want to protect your profits.
You could place a stop limit order with a stop price of $90 and a limit price of $95. If the stock drops to $90, your order will become alimit order to sell your shares at $95.
It is important to understand the risks associated with a stop limit order before using it on Binance. If there is not enough liquidity in the market and the price drops past your stop price, your order may not be filled at all. Additionally, if the market moves quickly, it may fill at an unexpected price. Finally, if the market moves in your favor quickly, you may be left with an unfilled order or one that was filled at a much lower price than expected.
For these reasons, it is important to understand how this type of order works before using it on Binance. It is also advisable to exercise caution when using a stop limit order and monitor your positions closely.
There are two types of stop orders:
• A buy stop order is placed above the current market price and is typically used to protect against downside risk.
• A sell stop order is placed below the current market price and is typically used to protect against UPSide risk.