How to place stop-limit orders? With this tool, you will never be afraid of price changes!
High volatility is one of the main characteristics of the crypto market.
Sometimes, a PUMP or DUMP may happen in just an instant.
On the other hand, it is almost impossible for you to be able to monitor closely the price changes 24 hours a day. So, it is worth thinking better about how we can optimize our results and minimize the risks.
The most experienced traders will opt for the stop-limit function: control risks to obtain timely returns.
NovaDAX supports the stop-limit function in the crypto-crypto order book and is the first exchange in Brazil that provides the function in both the fiat-crypto and crypto-crypto order book.
What is stop-limit?
Stop-limit is a type of order in which you can determine 2 key factors: the trigger price and the order price. When the trigger is reached, the order will become active and will be placed in the order book and will only be executed at the price set before or at a better price.
There are two types of stop-limit orders:
stop-loss: the one that you avoid losses and will schedule an order in case of significant falls.
take-profit: by which you can schedule a purchase when achieving certain price to take advantage of appreciation in time.
Access the NovaDAX website, click on the option Products> Crypto-Crypto order and select the Stop-Limit function beside the graph.
1) Trigger (stop price): the price that will trigger the order to be placed into the order book with the price defined by you (2)
2) Price: the specific price of the order to be placed in the order book, at which you are willing to buy or to sell.
3) Amount: the specific amount of the cryptos to buy or to sell.
How to place a stop-limit order?
Let’s take BTC / USDT pair as an example to understand better how a stop-limit order works.
First of all, it is important to analyze the support level and the resistance level. You can find the analysis techniques in the strategy articles on our blog.
Let’s take a look on the BTC scenario on Mar 4th, where the price was $ 8740.
Determine the resistance level + place a stop-limit purchase order
Analyzing BTC’s historic performance, we can find that the resistance is around $ 8950. If the price can break this resistance, it may go up to $ 9300.
The resistance level is $ 8950 while the resistance area is between $ 8950 and $ 9300.
However, it is impossible to sit around a computer to keep eyes on the price movement, while we do not want to miss a good timing to buy. In this situation, a stop-limit purchase order can help us, using the following parameters:
Trigger: $ 8950
Price：$8955 (or any price higher than $8955)
Amount：1
When the BTC price reaches $ 8950, your purchase order of 1 BTC at a price of $ 8955 will be activated and be placed in the order book.
Determine the support level + place a sales order with stop-limit
Even with profits made, it is important to control risks and avoid losses.
Using the same example described above, when each BTC was traded at $ 8740.
Studying BTC’s historic performance, we can come into conclusion that the support level is around $ 8250. If the price drop above the this level, it may continue to decrease to $ 8000 until a new support level is founded.
The support level is $ 8250 while the support area is between $ 8000 and $ 8250.
You may not want to take much risk of a significant decline and intend to stop loss if the price drops to $ 8250.
In this situation, you could place a sales stop-limit order, using the following parameters:
Trigger：$ 8250
Price：$ 8250（or any other price lower than $ 8250）
Amount：1
When the price of BTC falls below $ 8250, your order to sell 1 BTC at a price of $ 8250 will be activated and be placed in the order book.
Finally, you will have the opportunity to escape from the stress of looking at the charts the whole time by using the stop-limit function, and certainly your investment life will become much easier than ever with less time focused on placing orders.
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All digital asset investment is at risk. This article should only be treated as a strategic reference and does not serve as investment advice.
