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Academy Navigating OKX Article

How to use stop orders and OKX’s other advanced order types

2022.05.06 Rick Delaney

OKX provides advanced trading tools and features to enable crypto traders to deploy sophisticated strategies. We offer a range of stop orders to help dial in the perfect execution price, including regular stop orders, trailing stops, trigger orders and advanced limit orders. 

This introductory article will explain OKX’s advanced order types and how to use them.

How to use stop orders

A stop order is an order type that enables traders to buy or sell an asset or derivative once its price reaches a specific point — called the trigger price — that they set in advance. Once the market price reaches this predefined trigger price, a buy or sell order is automatically placed at the order price set (not necessarily the same as the trigger price) or the market price.

In practice, this means a trader looking to sell BTC has a choice of how to sell it via a stop order: Either they can sell at a higher price (to ensure a profit) using a take-profit, or TP, order; or they can prevent losses by setting a floor price at which to sell, using a stop-loss, or SL, order.

The same is true if the trader is looking to buy Bitcoin — they can set a specific price, or trigger price, at which they want to buy BTC, depending on market conditions. This functionality is handy in crypto markets due to their 24/7 nature. It enables traders to set up orders that trigger when some condition is met and trade even when they aren’t available to monitor a position.

Stop order example

Let’s say a trader bought Bitcoin at $40,000. They can set a stop order to take profit, setting the trigger price at $42,000 and the order price at $41,950 ($50 less to ensure that the order gets filled immediately).

The trigger price serves as the threshold that the price needs to reach before the conditional order comes into play. A trader could use the same value for both the trigger price and the order price, but given the volatile nature of crypto markets, this could result in orders remaining unfilled — the price could momentarily touch $42,000 before dropping sharply.

Nothing will happen if the market stays below $42,000, but as soon the market price touches $42,000, the order at $41,950 will be triggered and subsequently executed.

Similarly, the trader who bought at $40,000 can prevent losses with a stop-loss order by setting the trigger price at $38,500 and an order price of $38,450, for example — to exit the position within their acceptable margin for loss.

Alternatively, the trader can also set trigger and order prices to buy Bitcoin at certain levels (as shown below) for profitable entries (bullish or bearish). 

A stop order allows traders to set trigger and order prices to open or close long and short positions depending on market direction.

OKX stop order optimizations

OKX supports multiple optimizations for the stop order function, available for traders on both the desktop and mobile app versions of OKX. These upgrades for stop orders give users more flexibility and freedom to strategically trade digital assets on OKX.

One cancels the other

The information above relates to a conditional stop order. With a one cancels the other stop order, a trader can set both a stop-loss condition and a take-profit condition simultaneously, and the order executed first — based on the user’s set trigger and order prices — will invalidate the other.

For example, a trader holding BTC bought at $40,000 can set conditions for taking profit and stopping loss at the same time, using the OCO function. The BTC price can swing either way and activate one condition, automatically invalidating the other.

As shown in the image above, traders using the OCO order type can set four conditions. If they want to exit a trade for profit once the price crosses $42,000, they can set that price as their “TP Trigger Price” and a slightly lower one for their “TP Order Price.” They can exit the same trade to stop loss by setting the “SL Trigger Price” and “SL Order Price” at their desired levels, too.

This order type is suited to highly volatile crypto markets that can move in either direction within hours, necessitating such multi-conditional orders for optimal trades.

Market and limit stops

Users can set their buy and sell orders as either limit or market orders when using stops. The former executes the trade at a user-specified price point or better, and the latter executes instantly at the current market price. 

Clicking Market next to the order price will toggle between limit and market order types. 

Last, index and mark prices 

Users can further customize their stop orders by choosing which price to reference when executing their trade. Last price uses the most recent OKX market price, index takes an average across OKX and other leading exchanges, and mark uses the index price with an incorporated moving average. Using either the index or mark price will reduce the potential impact of isolated price volatility on an order’s execution.  

Using the dropdown menu highlighted below, you can select which price your trigger will reference. 

How to use trailing stop orders

A trailing stop order is an order type that enables a trader to maximize and protect gains. It is an advanced form of stop order that automatically deploys an order at a predefined point above or below the current price. Trailing stop orders are beneficial when a trade is going in the trader’s direction but they are either unable to monitor their position closely or are unsure how far the price will run. 

When traders long a position, they set their trailing stop below the current price. When short, trailing stops are placed above the current price. 

As the price moves favorably for the trader, the trailing stop moves up for long positions and down for short positions. The trail variance determines the order price used relative to the current price. OKX supports two trail variance modes. 

If a trader is long and the price continues to move downward, eventually, the price will hit the trailing stop, and the trade will execute. 

Selecting “Var.” from the OKX trading dashboard menu will deploy orders at a fixed USDT amount above the current market price when shorting and below it when longing. “Ratio” will deploy orders above or below the market price at the percentage selected.  

Trailing stop order example

Suppose you bought 1 BTC at $40,000 in anticipation of a price pump but will be unable to monitor your trades for a short period. You could place a trailing stop sell order with a trail variance of 500 USDT to maximize your position’s profitability and exit on a trend reversal. 

The BTC price starts rising, moving from $40,000 to $42,500 in just a few hours. It then pulls back suddenly, losing $500. Your trailing stop executes $500 below the local high, exiting the position in profit. 

Alternatively, you can use a trailing stop to enter a position at a favorable price. Suppose BTC price has been plunging, and you believe a relief bounce is likely. You could set a trailing stop to buy BTC at 5% above a local low. When BTC price reverses to the upside, your order will execute, giving you exposure to what may be a continued upward price move.   

In hugely volatile markets like cryptocurrencies, carefully choosing your trail variance amount is essential. A smaller price movement will trigger your order if you set it too close to the current price. If you set it too far from the current price, you will miss out on some or potentially all of a price move. 

OKX trailing stop optimizations

Traders can set the price at which they want their trailing stop order to activate using the “Activate price” option. Check the box to enter your desired price before clicking Buy or Sell

If you don’t set an activate price, the order will be active as soon as it has been submitted, and a buy or sell order will execute when the trail variance condition is met. 

How to use trigger orders

A trigger order is an order type that deploys a stop order when a specific price point has been hit. Again, they are a helpful way to automate trades conditionally, enabling traders to take advantage of market conditions even when they cannot closely monitor a position. 

Trigger orders have a trigger price, which is the price at which your order will be submitted and can be either market orders or limit orders. Traders can choose whether to use the same trigger price and order price or slightly different prices. 

A trigger order is also advantageous because the order is only revealed to the market when the trigger price is hit. This can be particularly important when making large orders that might influence other market participants. 

Trigger order example 

Suppose the BTC price has fallen from $50,000 to $40,000, and you think it will drop more before reversing. You can use a trigger order to buy BTC at your selected price. 

On the trading dashboard, enter the price at which you’d like your order to be submitted in the “Trigger price” field. Then, enter your order price, the relevant amount and click Buy or Sell

Select the desired order type using the Market button. When the trigger is hit, a market order will execute your trade instantly at the best market price. A limit order will fill at a price you set or better. Like regular stop orders, you can also select the last, index or mark price as your order’s trigger.

How to use advanced limit orders

In addition to regular limit orders with which a user can specify a minimum price at which an order will be filled, OKX offers various advanced limit orders. The different options enable traders to choose the required conditions to execute an order. The available choices are “post only,” “fill or kill” and “immediate or cancel.” 

“Post only” ensures that an order is only posted to the order book if it would not be posted at the same price as an existing order on the book. Essentially, the order will always be a “Maker” order, meaning that the trader will benefit from lower Maker fees relative to the more expensive Taker fees. If there is a matching order already on the order book, the “post only” limit order will be canceled automatically. 

“Fill or kill orders” cannot be partially filled. Either the entire order is executed, or the order is automatically canceled. 

The final advanced limit order option is “immediate or cancel.” As the name suggests, the order is automatically canceled if some or all of it is not filled immediately after posting to the order book. 

OKX’s advanced limit orders are easy to use. After selecting the order option from the menu, enter your limit price and the desired amount of the asset being traded. Check the details and click the Buy button to place your order. 

Our advanced order types are just one example of our world-leading crypto ecosystem’s many innovative features. Experienced traders can deploy highly sophisticated trading strategies to take full advantage of crypto market movements at OKX. 

Not an OKX trader yet? Sign up today and start trading on our industry-leading platform.  

Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involve significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.