Stop loss orders: what they are and how they work in crypto
A stop loss order tells a crypto exchange to place a trade when a trigger price is reached. It is a conditional order, and its fill price can differ from the stop.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20263 min readFact-checked
On this page
A conditional order only acts after a condition you set is met. Crypto markets trade around the clock, so a stop can trigger at any hour.
Why use a stop loss order?
A sell stop automates selling so you do not have to watch every price move. You set the trigger in advance, and the exchange watches the market. A sell stop can cap a loss or protect a profit. A buy stop automates buying.
- Set the trigger before the market moves.
- Let the exchange watch the market.
- Cap a loss with a sell stop.
- Protect a profit with a sell stop.
How does a stop loss order work?
When the trigger price is hit, the exchange places the order you chose. A stop-market order becomes a market order. A stop-limit order becomes a limit order at your limit price.
What are the risks of stop losses?
Your fill price can be worse than your stop. Slippage is the difference between the price you expected and the price you get. In a fast market or a thin order book, a stop-market order can fill at a worse price. A price gap can jump past your trigger, so the order may fill at the next available price.
Stop loss vs limit order
A limit order sets the price you will accept. A stop loss waits for a trigger before it places an order. A stop-limit order combines both.
Frequently asked questions
No. A stop-market order gives no control over the price you receive. A stop-limit order sets a limit price, but it may not fill.
It still triggers. A stop-market order fills at the next available price. A stop-limit order may not fill if the gap leaves the market beyond your limit.
Usually yes. You can cancel an open stop order before the trigger price is reached. Once it triggers, it is no longer an open stop order.
