difference between limit order and stop-limit order on Binance (& others)
During my second trade on Binance I noticed there were 2 options for selling: limit orders & stop-limit orders. From doing a search, reading an Investopedia article, and watching a short YouTube video (linked below) I gathered that the difference is in how the trade is executed. Once a stop-limit order's target is reached it then turns into a limit order and can be "limited" to fill above above or below the stop-price. So if I put in a limit order at .00055BTC it would fill as soon as the lowest ask(sell) price is over that amount at a slightly less specific variety of prices (according to the offers at that time when the value hits your limit price)...but with stop-limit I can say wait til the lowest ask hits .00055BTC then fill at .00060 (betting that someone will try to sell above the lowest ask fairly quickly)....So I can actually get a little higher or lower price with a stop-limit.
Again I am just a newbie trying to figure this out myself so I would like some confirmation, if anyone out there is able and willing! It would be much appreciated.
PROS/CONS:
The only advantage I see from using straight limit vs. stop-limit is a more flexible (and likely) sell. Disadvantage is that it could sell at a more undesirable price....more clarification would be appreciated on the pros/cons here from someone more familiar with these types of orders-- inside-and-out!
Here's the YouTube vid. I saw after Googling difference between limit and stop-limit order:
Here is a great explanation from Binance on their stop-limit orders. Unfortunately they don't go into limit orders and leave that to yourself. I suppose it is a matter of logic and reasoning on the trader.
https://support.binance.com/hc/en-us/articles/115003372072
nice info,,
just trying to make things better one key at a time
A stop order is reissued as a market order, once its triggering condition is satisfied (usually, that's just a price level being hit by one or more trades, but can have other constraints, such as volume.) A sell stop's triggering condition is satisfied when price trades at or below the trigger price. A buy stop's triggering condition is satisfied when price trades at or above its triggering price.
A stop limit order is reissued as a limit order, once its triggering condition is satisfied. By default, the limit price is the same as the stop price, but it can be different. If different, that's usually specified as a constant number of ticks different than the stop price, or as a constant percentage of the stop price.
A limit order is one that will not execute at a worse price than its specified price constraint, but might execute at a better price. For a buy limit, that means it will execute at any price at or below its price constraint. For a sell limit, that means it will execute at or above its price constraint. Note that this behavior is the inverse of a stop order.
Hope that helps.
Thanks, strategesis that does help.
However I am still a little confused about the inverse relationship. Is stop-limit only meant for stop-loss trades where I want to limit losses when price drops? Can it also be used if I want to execute an ask/sell above say .00006 and then only fill above .00007 (on the assumption that someone will be buying higher)?
I little drowsy now, think I may have to return to this in the afternoon...thanks again!
All three basic order types -- market orders, limit orders, stop orders -- can be used to either enter or exit a position. You can also use any one of them with either long or short positions, if the instrument you're trading is shortable.
So yes, you can use a stop limit to enter long, so that the limit order that gets submitted to the exchange once the stop is triggered prevents a bad fill price.
I'm having trouble setting up my trade on Binance. So if I have XRP at 0.00015 and hope it goes up to 0.00030, can't I set a stop limit buy where stop = 0.0003 and limit = 0.0003001, for example?
What I'm missing on Binance is:
Order limit is quite handy for exchanges. One of my favorite exchange kucoin, recently added this feature in their kucoin 2.0 update. Other than this, they also add some solid features that will make them compete with the top exchanges out there.