The Stop order is a combination of Stop-Loss and Take-Profit orders. It becomes active only when a specified price level (the stop price) is reached.
How Stop orders work
The system will decide if an order is a Stop-Loss order or a Take-Profit order based on the relationship between the trigger price against the last market price when the order is placed.
| Buy/Sell | Stop Price Level (Trigger Price Level) | Order Type |
| Buy Order | Trigger Price > Latest Price (Current market price) | Stop Loss |
| Trigger Price < Latest Price (Current market price) | Take Profit | |
| Sell Order | Trigger Price > Latest Price (Current market price) | Take Profit |
| Trigger Price < Latest Price (Current market price) | Stop Loss |
Important Note: Trigger price is not allowed to equal last trade price when placing orders
Types of Stop Orders in Spot Trading
In spot trading, there are two main types of stop orders:
Stop-Limit Order
- Combines features of both limit and stop orders.
- Allows you to set a specific limit on the price at which your order will execute once triggered.
Stop-Market Order
- Converts into a market order once triggered, executing at the best available market price.
Why Use Stop Orders?
- Risk Management: Stop orders help protect your investments by limiting potential losses.
- Profit Taking: They allow you to lock in profits automatically when prices reach predetermined levels.
- Market Entry: You can use stop orders to enter trades at favorable prices during market movements.