Stop-limit is a type of order that will be activated and turned into a limit order when the price of the cryptocurrency moves past a particular point (called stop price), ensuring a higher probability of achieving a predetermined entry or exit price.
There are two types of stop-limit order in one exchange: stop-loss, in which you can minimize loss and program to place an order in case of strong falls of price, and take-profit in which you can program a buy order to profit from anticipated upward movement once the resistance level is broken out.
Steps to put a stop-limit order:
1) Trigger (stop price): the price where the order will be triggered and placed in the order book at the price you set. (2)
2) Price: the specific price of the order to be placed in the order book, to buy or sell
When the trigger is reached, the order will become active and be placed in the order book (marked with a green symbol), and will only be executed at the set price or a better price.
3) Amount: the amount of coins that you are willing to buy or sell.
Example of stop-loss:
You bought 0.01 BTC at the price of 10,000 USDT. The current support is around 9,750 USDT and you believe the price will continue to fall if it falls below the support level, so you can create a sell stop-limit order to limit your loss using the following parameters:
Stop price: 9,750
Amount: 0.01 BTC
Example of take-profit:
The current price of BTC is 10,219.19 USDT. The resistance is around 10,500 USDT and you believe the price will continue to rise after resistance being reached. You can create a buy stop-limit order and buy 0.01 BTC at a price of 10,500 USDT using the following parameters:
Stop price: 10,500
Amount: 0.01 BTC