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  4. What is a Stop Order?

What is a Stop Order?

A Stop Order does not create an order immediately. In fact, a Stop Order is your instruction to the exchange (a market order) that says something like: If the price of my asset falls below XX, sell the specified amount of my asset by executing a Market Order (a request to sell at the best available price in the current market).

If the price changes and reaches XX, your STOP Order will create a Market Order that will sell your asset in accordance with the market order rules.

Here is a formal definition:

A Stop Order is a form of a pending market order to automatically execute the sale or purchase of an asset (for a specific asset amount) when the market price reaches a specified price (Stop Price) to hedge exchange rate risks in case the rate turns downward.

This is true for both asset buy and sell orders, called Stop Sell Orders and Stop Buy Orders.

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What is a Stop Sell Order?

A Stop Sell Order is an order to sell an asset if its market price falls to a specified level (Stop Price). Traders use this kind of order when they expect the asset price to grow but hedge their assets from a possible price decline. A Stop Sell Order is entered at a stop price below the current market price.

Please note: The Stop Sell Order will be executed for the specified asset volume; however, it does not guarantee that the final amount will be equal to that calculated when the order was created.

What is a Stop Buy Order?

A Stop Buy Order is an order to buy an asset if its market price increases to a specified level (Stop Price). Traders use this kind of order when they expect the asset price to fall but hedge their assets from a possible price increase. A Stop Buy Order is entered at a stop price above the current market price.

Please note: The Stop Buy Order will be executed for the specified total order amount and not the asset volume specified by the user.