If you want to learn how to use the stop-limit order and the OCO order at Binance or any other exchange, first, you must understand the logic of this type of order. STOP orders serve to set specific triggers at certain prices to execute your buy or sell orders. They are serving both to limit the loss if things go the wrong way and to ensure profit. They are called STOP LOSS and STOP GAIN (also known as Take Profit), respectively.
There are two types of STOP orders: Stop Limit and OCO (One Cancel Other). In this article, we will explain how to use the Stop Limit and OCO order at Binance. However, the logic is the same for any Exchange that has these types of orders.
How to use Stop-Limit?
If you’ve already understood the difference between limit orders and market orders, you probably won’t have a hard time understanding how to set up your Stop Limit order.
In the image above, we see that there are three fields in particular: Stop, Limit, and Amount. In the STOP field is where we configure where we want OUR TRIGGER to be activated, which will define the price at which his limit order will be sent to the order book.
Remember: the stop price is always the trigger.
In the Limit field, we place the price at which the order will go to the order book. Notice that for buying, we have put the stop price at $ 8,900.00 in the example, the limit order was at $ 8,950.00. In this case, what would happen is that when the price reached $ 8,900.00, a limit purchase order of $ 8,950.00 would be sent to the market, which would probably be executed on the spot in this case.
To sell would be the same thought. When the price reaches $ 9,100.00, the system will send a limit order of $ 9,050.00, which would also be executed immediately.
The Amount field is where we determine the amount that will be executed in the order.
Why is there a difference in the STOP price to LIMIT price?
This difference is called “spread,” and it is crucial to know how to configure it, we must always pay close attention when filling in the fields. The ideal is to keep between 1-2% difference between orders to avoid the risk of the market skipping your order (not executing) if they are in similar or very close values. In days of high volatility, this is very likely to happen.
How to use: Order STOP OCO
The term OCO is an abbreviation of the English expression “One Cancel Other”. Basically, in an OCO order, you have two conditions for your orders to be executed. Let’s go to the example below:
In this example, in the “BUY BTC” section, what we are trying to do is:
Leave a limit buy order at $ 8,900.00, but with a STOP BUY configured so that if the price exceeds $ 9,300.00 before going to $ 8,900.00, the system will send an order to purchase at $ 9,350,00.
It is a way of trying to get the best possible price but protecting yourself so that any sudden rise does not keep you out of the more significant movement.
In the “SELL BTC” section, the logic is the same, but in the opposite process. You will set the limit order on your take profit target and hedge yourself with a stop loss if the market changes sides. In the example above, we want to sell Bitcoin for $ 10,000.00, but if the price reaches $ 8,500.00 before reaching $ 10,000.00, a limit sell order will be sent at the rate of $ 8,400.00.
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