Stop and stop limit orders allow you to automate the buying or selling of an asset when it reaches a specific price. These tools help protect profits, minimize losses, or ensure you only buy when the price increases to a certain level.
Stop Order
A stop order is triggered when the asset reaches the stop price you set. At that moment, it turns into a market order and executes at the best available price.
Buy Stop: Used when you want to buy an asset if its price rises to a certain level.
Sell Stop: Used to sell an asset if its price drops to a certain level.
📌 Example
You own XYZ stock, which is trading at $10. To limit losses, you set a sell stop order at $8. If XYZ falls to $8, your order is activated, and the shares are sold at the best available market price.
Stop Limit Order
A stop limit order combines a stop order with a limit order, giving you more control over the execution price.
When the asset reaches the stop price, instead of becoming a market order, it turns into a limit order, meaning it will only execute if the price meets or exceeds your set value.
Buy Stop Limit: Used to buy an asset when its price rises, but only up to a defined maximum price.
Sell Stop Limit: Used to sell an asset when its price drops, ensuring it doesn’t sell below your minimum price.
📌 Example
XYZ is trading at $20. You want to sell if it drops to $18, but you don’t want to sell for less than $17. You set a stop limit order with a stop at $18 and a limit at $17. If XYZ falls to $18, the order is triggered but will only execute if buyers are willing to pay at least $17. If there’s not enough demand at that price, the order may not be completed.
In short:
Order Type | How It Works |
Stop | Triggers at the stop price and turns into a market order. |
Stop Limit | Triggers at the stop price and turns into a limit order, ensuring a minimum or maximum price. |
📢 Important Notes
Stop and stop limit orders only execute if the market reaches the set price.
A stop order may execute at a different price during periods of high volatility.
A stop limit order may not execute if the limit price is not reached.
If you have more questions about using these orders in Hapi, contact us. We’re here to help!