1.2 k views

Stop Loss or Stop Limit Order: Which Order to Use and When

Trading cryptos is not as easy as it sounds, and most people will tell you that. However, even professionals require some handy tips to ensure they are profiting from the market. These tips include using order techniques to regulate the amount spent during trading. 

Using such tips, you can be sure to earn a living from trading or even become a crypto millionaire. Each executed trade requires at least two orders to be considered complete: the buy and sell orders. Other orders enable traders to be more specific about how they would like to trade. 

It is crucial to comprehend what stop-loss and stop-limit orders are and when and how to use them to match them to your trading objectives. This guide has everything you need to know about stop loss and stop limit captured, so read on!

Stop Loss vs. Stop Limit Overview

Stop loss and stop limit are vital and used by traders to control potential losses while trading cryptocurrencies, especially when they cannot exit the market manually. They help prevent traders from staying glued to their screens and contribute to general peace of mind. However, it is crucial to understand that there is a subtle yet crucial difference between the duo. 

It may help to think of different orders as special tools suited for different purposes. Whether you buy or sell, it’s crucial to figure out your primary goal – to control a trade price or have an order filled promptly at prevailing market prices.

Stop Limit Order – Execute Trades Once the Price is Right

A stop-limit order means traders reduce the risk of loss by specifying the highest and lowest price of cryptocurrencies they are willing to accept. They are orders to purchase/sell at a specified price. Stop-limit orders are a great tool of control for investors by specifying maximum or minimum prices for every order.

A limit order is triggered as soon as the price of cryptocurrencies reaches the fixed stop price. Losses are limited by defining a point whereby a trader is unwilling to incur more losses. However, it does not promise to execute an order if the cryptocurrency fails to reach the defined price.

Depending on prevailing market movements and where investors set the price, stop-limit orders may or may not get executed. However, they are often used when traders want to get the best possible market price to maximize profits and are usually worth the risk of not getting executed. 

Stop Loss Order

Stop-loss orders help lower risk exposure and limit losses if the market moves against the predictions of a trader. Simply put, they instruct brokers to close a loss-making trade at specified price levels. They are akin to market orders – because they are orders to buy or sell cryptocurrencies at the best-prevailing price. 

However, these orders are only filled if the market gets to a certain price. Investors key in orders to exit a trade if prices move towards a specified loss level during the trade. Traders also use stop-loss orders to capture certain amounts of profits during trades. 

For instance, if a trader buys coins at $5 and the price moves to $10, they may set the stop-loss order at $7, locking $2 in profit in case price levels start to fall.

Note: for sellers, the stop loss order has to be placed below the current price, whereas for buyers, stop it should place the loss above the current price. Traders need to take adequate measures to safeguard their trades against huge losses.

How and When to Use Each

No universal size is suitable for both when applying stop-loss or stop-limit techniques. Stop-loss and stop-limit may serve the same purpose, but the impact differs for short-term and long-term investors.

Short-Term Traders

These are mainly intra-day traders, and their common characteristic is that they often cut their losses moderately faster. They aim at relatively volatile contracts; hence they prefer using sell-stop orders as their preferred strategy. Short-term traders also have minimal interest in medium-term contract recoveries; thus, a quick sale lower than their first stop-loss limit would be acceptable.

Long-term Traders

Long-term traders often take a long-term approach while trading. Consequently, they opt to use the stop-limit technique. However, presumptuous that prevailing conditions and fundamentals remain constant, they may be glad to wait. 

However, being patient does not mean they do not reassess other possible investment prospects with time. They are, however, less vulnerable to volatile short-term movements.

Pros and Cons of Stop-Limit and Stop-loss Orders

Both stop-limit and stop-loss orders help provide a certain level of protection to traders. These orders are a great tool if you want more control of the risks in the crypto market, which is known to be volatile. These are the possible pros and cons posed to users of stop-loss and stop-limit strategies:


  • Stop-loss orders are final, thus eliminating room for emotional decision-making.
  • Stop-limit orders help safeguard against extreme price volatility up to a certain degree.
  • Stop-loss orders control the number of funds an investor is willing to lose.
  • Limit orders can help save money


  • Stop-limit orders do not guarantee trades
  • Both can lead to marginal returns if not well placed


There you have it! An ultimate guide on significant factors of stop-loss and stop-limit strategies as a vital part of crypto trading. Whether you use stop-loss or stop-limit orders, they are a perfect way to ensure protection for long-term and short-term traders.

Stop limit mainly guarantees price, while stop loss guarantees execution. Stop orders also help minimize losses and risks, in turn maximizing returns. From this guide, it is precise that using orders is an integral part of crypto investing.

Bitcoin live price
price change

Conduct due diligence on other great trading strategies, and combined with orders, you will earn a profit. And take every word as necessary!

Stay up to date with our latest articles

More posts

How Can Social Media Benefit from NFTs and Blockchain Technology?

The digital world is transforming in ways we never imagined, and Non-Fungible Tokens (NFTs) are leading the way. Thanks to blockchain technology and NFTs, social media platforms are beginning to experience a new level of engagement. From customizable avatars to augmented reality items, NFTs are giving big tech companies new ideas. This article will explore the potential benefits of using NFTs for social media platforms and the sector’s best practices. In this context, Instagram's experiment with NFTs represents a peculiar…

From Web2 to Web3 – How to Move an Existing Project to the Blockchain

Web2 and Web3 are two different generations of the World Wide Web. While Web2 is a centralized platform, Web3 is decentralized and powered by blockchain technology.  The success of Web3 has been enormous, with many people now moving from Web2 to take advantage of its benefits.  However, the path to Web3 is not always straightforward. It is complicated and requires a deep understanding of both technologies. Today's guide will ensure you have the right information to successfully move from Web2…

The Role of a Valid Go-To-Market Strategy in a Crypto Project Success

In the rapidly evolving world of cryptocurrency, a good go-to-market strategy is essential for any project to achieve success. Unfortunately, it's not enough to create an innovative product. You must also know how to reach your target market and effectively promote it to gain traction.  With careful planning and execution, you can develop an effective launch plan to maximize your chances of success in crypto. This article will discuss the importance of a go-to-market strategy and common mistakes when developing…

How Can a Team Create Market Traction on Its Crypto Project?

Market traction is a must-have if you want to create real, lasting success with your crypto project. But how do you ensure your team achieves the traction needed to drive meaningful growth?  This guide will explore some strategic methods for building and maintaining momentum in the crypto sector. Never underestimate the power of effective market traction – it could be the key to unlocking your project's potential. Why You Need Market Traction in the Crypto Sector The success of any…

Which Features Should a Successful Crypto Team Possess?

Creating a successful crypto team becomes imperative to succeed in this industry. This is particularly true as more people come together and launch their digital currencies or tokens. The right team and set of skills can make a huge difference in the overall success of your crypto project. This guide will explore features a successful crypto team should possess to ensure long-term success. Is There an Ideal Profile for a Crypto Team? A successful crypto team should be composed of…

What Happens When a Stablecoin Loses Its Parity (Depegging)?

Have you heard of stablecoins, the digital currencies designed to maintain a stable value? Stablecoins have become increasingly popular, and many people consider them an attractive investment option. But what happens if a stablecoin loses its parity, and how does it impact investors?   Understanding the General Concept of Stablecoins Before discussing a stablecoin losing its parity, we first need to grasp how these tokens work. Stablecoins are cryptocurrencies tied to fiat currencies like the U.S. Dollar or Euro. This means…

What You Need to Know Before Investing in a Crypto Project with Anonymous Team

Investing in a cryptocurrency project can be an exciting way to grow your wealth, but it can also be risky. Investing in a crypto project with an anonymous team adds complexity and risks. The Phenomenon of Anonymous Crypto Teams If you explore the Internet for financial ideas, you've probably already encountered anonymous crypto teams. Some cryptocurrency teams that stay anonymous are growing successful. Some anonymous crypto teams have succeeded, despite traditional investors' reluctance toward them. For example, to this day,…

NFT Plagiarism Phenomenon – A Beginner’s Guide

The world of Non-Fungible Tokens (NFTs) has attracted creativity and innovation, reshaping the global art scene. However, it has also brought a new challenge for creators – the risk of their work being plagiarized or stolen. In this beginner's guide, we explore the NFT Plagiarism phenomenon and offer some strategies to protect your original content. We will also share some tips for creating original NFTs that are harder to copy. The Phenomenon of NFT Plagiarism NFT plagiarism has become increasingly…

How to Write a Crypto Whitepaper – A Beginner’s Guide

With the rise of cryptocurrency, it's no surprise that many people want to get involved in the industry. But before launching a successful crypto project, one of the most important steps is writing an effective whitepaper. A whitepaper serves as a document that outlines your project and explains its core components and strategies for success. This process may seem daunting and overwhelming for those who have never written a whitepaper. This guide aims to help beginners understand how to write…

The Dark Side of Crypto – Fear, Uncertainty, and Doubt (FUD)

Cryptocurrency markets are vulnerable to the fear, uncertainty, and doubt (FUD) strategy malicious actors use. Considering the importance of expectations on the financial markets, understanding FUD is essential for traders and investors. Over the years, media, social networks, and lawmakers have played a key role in spreading FUD. But what exactly is FUD, and how can investors protect themselves? In this article, we explore the use of FUD in the crypto industry and its impact on traders. Understanding FUD in…