A stop-limit order consists of Trigger Price and Limit Price. The trigger price is simply the price that triggers a limit order, and the limit price is the specific price of the limit order that was triggered. This means that once your trigger price has been reached, your limit order will be immediately placed on the order book.
Although the trigger and limit prices can be the same, this is not a requirement. In fact, it would be safer for you to set the trigger price a bit higher than the limit price (for sell orders) or a bit lower than the limit price (for buy orders). This increases the chances of your limit order getting filled after the stop-limit is triggered.
Sometimes you might be in a situation where the price drops too fast, and your stop-limit order is passed over without being filled. In this case, you may appeal to stop-market orders to immediately get out of the trade.
When should you use it?
Stop-limit orders can be used for stop-losses. They are also useful for placing Sell orders to take profits. You may also set a stop-limit buy order to buy an asset after a certain resistance level is breached during the start of an uptrend.
Keep in mind that using a stop-limit order for stop-losses does not guarantee to cut your losses because the order might not get filled.
How does CoinPanel handle stop-limit orders?
Stop-Limit orders on CoinPanel does not work the same way they do on the exchange! When you create a stop-limit order on the exchange, your balance will be blocked in the order. In this case, you can not create stop-loss and take-profit orders simultaneously. On CoinPanel, stop-limit orders do not block your balance, because a limit order is executed on the exchange only when the trigger price is reached.
Should I use stop-market or stop-limit?
A stop-market order triggers a market order when the trigger price is reached. For stop-losses to protect you when the market is dropping fast, stop-market order is safer because it will fill immediately. However, with a stop-market order, you might pay higher prices caused by slippage. If you are not worried about slippage, we recommend using stop-market orders.