Lesson 4 of 6 · 5 min
Decide your exit before you need it
Every position has a price at which you were wrong. Knowing it is easy. Acting on it while the price falls and you are hoping it turns around is hard. A stop order lets you decide in advance.
A stop-limit has two prices. The stop price is the trigger: nothing happens until the market trades there. At that moment a limit order at your limit price is placed. For a sell, the limit usually sits at or a little below the stop.
The catch is that the limit may not fill. If the price falls straight through your limit, as it does in a crash, your order is placed but nobody buys at your price, and you are still holding. A stop-limit protects you from selling absurdly low; it does not promise you will get out. Its alternative, a stop-market, promises the exit but accepts any price. This desk offers the stop-limit.
A stop is not insurance. It is a decision you took in advance, with its own failure modes.
Your turn
Place a stop-limit under your entry
- On BTC, make sure you hold some. If not, buy a small amount at market.
- Choose Sell and Stop-Limit.
- Set the stop about 2% under the last price and the limit a little below the stop, then press Sell BTC.
- The order waits in Open orders, marked as awaiting its stop.
What you just learned
A stop-limit fixes your exit rule in advance. It limits how low you sell, but it cannot guarantee you sell.