Stop-Limit Order
The stop-limit order is the most commonly used trigger order. Knowing the limit-stop-limit order of price limit, you can know why the stop-limit order may not be sold.
What is a stop-limit order？
Stop-limit order: Set the trigger price and order parameters in advance. When the last transaction price in the market reaches the trigger price, the system will place an order to close the position according to the order parameters set by the user, to keep profits or reduce losses. Among them, the trigger price is the precondition for placing an order, which is generally the target stop-loss position.
According to the different types of orders executed after the stop-limit order is triggered, the stop-limit order is divided into:
Limit-stop-limit order
Market-stop-limit order
Limit-stop-limit order
Limit-stop-limit price needs to set the following parameters:
When the limit price is triggered, a limit order will be placed. The limit order stipulates the highest price that the user is willing to buy or the lowest price that the user is willing to sell, so the limit order may not be executed immediately, which means that the position may not be closed immediately after the limit price is triggered, depending on whether the price reaches your limit price.
Advantages of limit-stop-limit order
After triggering, the transaction price can be guaranteed to be within the limit price, and the slippage can be controlled.
Disadvantages of limit-stop-limit order
May not be able to successfully trade.
*Skills
To improve the transaction probability of the limit order, we generally do not set the order price and the trigger price to be the same but reserve a part of the slippage area. For example long position, the trigger price is 60,000 US dollars, and the order price can be set to 59,900 US dollars because a short order of 59,900 US dollars is easier to trade in the 60,000 US dollars handicap.
*Examples
See the "Example" section of the article
Market-stop-limit Order
Market-stop-limit order needs to set the following parameters:
When the market-stop-limit order is triggered, a market order will be placed. The market order will place an order at the best price in the market at that time, helping users to quickly complete transactions.
Advantages of market order
It can be traded immediately after triggering.
Disadvantages of market order
The transaction price cannot be guaranteed, and a large position in a market with poor liquidity may cause a large slippage.
*Examples
See the "Examples" section of the article
Summary
Both limit-stop-limit orders and market-stop-limit orders have advantages and disadvantages. Follow the suggestions below to get a better stop-limit effect:
If you want to stop profit, then choose the limit order, which can guarantee the profit
If you want to stop the loss, then choose the market order, and you can quickly make a deal
For small positions, it is recommended to choose the market price
For large positions, it is recommended to choose limit order or market order to take profit and stop loss in batches
Select limit order in illiquid markets
Execution logic of stop-limit order
The main parameters of the stop-limit order are:
The life cycle of a stop-limit order is divided into:
1. To be triggered
After a stop-limit order is successfully submitted, the stop-limit order is in the "to be triggered" state. The stop-limit orders in this state will be displayed in the [Plan Order List]. The stop-limit order is a liquidation order, so the direction of the stop-limit order for long positions is "go long", and the direction of the stop-limit order for short positions is "go short".
*Each plan order is like a mechanism that can only be triggered once. This mechanism will be triggered when the market price reaches the trigger price.
*Each stop-limit order has an expiration date, which is 14 days by default, and users can change it in [Trading Settings]. After the expiration date, if the stop-limit order has not been triggered, it will be canceled.
2. Trigger Rules
When the last transaction price of the market meets the following conditions, the stop-limit order will be triggered.
Take profit | Stop loss | |
Long Position | The last transaction price >= trigger price | Last transaction price<=trigger price & |latest transaction price-mark price|/mark price<anti-needle threshold |
Short Position | The last transaction price <= trigger price | Last transaction price>=trigger price & |latest transaction price-mark price|/mark price<anti-needle threshold |
*Stop-loss anti-needle mechanism
In an illiquid market, market price transactions may cause needles (exchange spikes), which is not good for stop-loss orders. To solve this problem, we have added a stop-loss anti-needle mechanism.
In the market, the mark price is not affected by needles. When the last transaction price deviates from the mark price by >10%, it can be judged as a needle. These transactions that deviate too much will not trigger the stop loss order.
Note: 1. Take-profit orders are not protected because the market opening at the time of needles may be beneficial to take profit. 2. The needle within 10% are not protected, because the price deviation within 10% is probably normal and does not belong to needles.
*Being taken over by a liquidation caused the trigger to fail
When the market fluctuates violently and the stop-loss price is close to the liquidation price, although the above trigger rules are met, the position is likely to have been/is being taken over by the liquidation engine when the trigger is triggered, which will cause the trigger to fail!
3. Order after the trigger
When the stop-limit order is triggered, the system will immediately submit an order to the market according to the order parameters. The parameters are as follows:
At this time, you can see the order in [Current Order List] or [Historical Order List].
*Liquidable quantity alignment
The user may manually execute the closing order to close the position after setting the stop-limit order. When the position has a liquidation order, the stop-limit order can only trigger the remaining liquidable part!
Example
Limit-take-profit scenario
On March 5, 2021, BTC broke through 50,000 US dollars. Player A opens a long position of 10 BTC with an opening price of $50,000. A's target take-profit position is $60,000. He chose to take profits in batches, so he set up a take-profit order at $58,000 and $60,000 respectively. The parameters are as follows:
Take-profit order 1
Take-profit order 2
Subsequently, BTC continued to rise rapidly as A hoped. It broke through 58,000 US dollars on March 13 and accelerated to break through 60,000 US dollars on March 14, reaching a maximum of 60,020 US dollars. But it did not stabilize at the high point, and fell back quickly after the breakthrough, leaving a needle.
On March 15th A went to check his position and found:
That is to say, only the take-profit order 1 is executed, but the take-profit order 2 is not executed.
This is a normal phenomenon, because when BTC reaches 60,000 US dollars, the take-profit order is triggered, and the system immediately starts placing the take-profit order. Although the price list has been placed, it is above the market and cannot be traded!
From the above example, it can be concluded that to increase the probability of a limit order being filled during the limit-stop-limit process, it is generally not necessary to set the order price to be the same as the trigger price but to reserve a part of the slippage area. For example: Take profit for long positions, the trigger price is 60,000 US dollars, and the order price can be set as 59,900 US dollars because a short order of 59,900 US dollars is easier to trade in the market around 60,000 US dollars.
Market-stop-loss scenario
On March 14, 2021, BTC broke through 60,000 US dollars strongly. Player A opens a long position of 1,000 BTC with an opening price of $60,000 and a target of $100,000. But for the sake of insurance, A sets a stop loss order at the market price of 54,000 US dollars, and the parameters are as follows:
However, BTC did not continue to rise as A expected but kept falling, and finally fell below $54,000 on March 23.
On March 24th A went to check his position and found:
In other words, although the loss was stopped, A suffered a relatively large slippage.
From the above example, it can be concluded that for a large position, do not use the full market price to stop the loss, it is better to use batch stop loss or limit price stop loss.
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