Article

How to Use Stop Order

okx learn
OKX Learn
2020.08.19

1.What is a Stop – Order?

Stop order is a kind of algorithm trading strategy by which users can predefine the trigger price and the order price, and the order will be placed automatically with the preset order price once the market price reaches the predefined trigger price. Through this strategy, Users can conduct momentum trading or exit the trade with stopping loss. According to the predefined direction and amount, stop orders can be divided into conditional orders and OCO orders. An OCO order will freeze the margin or position of one direction (SL or TP) in advance, and when one is triggered, the other will be invalid.

2.Term Explanation

1. Trigger price: The predefined condition that will trigger the order. A stop order will be triggered when the market price reaches the trigger price.

2. Order price: The price that the order will be placed at if the order is triggered. Users can also choose to place at market price so the order can be placed at the best current price and filled immediately(may not be filled immediately in extreme markets) after being triggered.

3. TP trigger price & SL trigger price (OCO): When selling, the TP trigger price is higher than the last price, while the SL trigger price is lower than the last price; When buying, the TP trigger price is lower than the last price, while the SL trigger price is higher than the last price.

3.How can I take profit & stop loss?

1. Case study

Case1(Close a long position with a conditional order):

User A holds a long BTC contract with an average open price of $9,000 and expects to close a long position to stop the loss when the market price drops to $8,000. Then the user A can place a conditional order according to the following parameters:

【Trigger price】$8,000

【Order price】$7,950( When selling out, a price that lower than the trigger price is recommended to make the order be filled immediately; Market price is also a good choice).

If the price falls to $8,000, stop-loss will be triggered, and a long position will be closed at $7,950. ( If the order price is set with the market price, the position will be closed at the market price immediately).

If user A wants to close a long position for locking in his gains, then the position should be closed out at a predefined price that higher than $9,000.

Case 2(Close a short position with a conditional order)

User B holds a short BTC contract with an average open price of $9,000 and expects to close a short position to stop the loss when the market price rises to $10,000. Then the user B can place a conditional order according to the following parameters:

【Trigger price】$10,000

【Order price】$10,050(When buying in, a price that higher than the trigger price is recommended to make the order be filled immediately; Market price is also a good choice.)

If the price grows to $10,000, stop-loss will be triggered, and a short position will be closed at $10,050 (If the order price is set with the market price, the position will be closed at the market price immediately).

If user B wants to close a short position for locking in his gains, then the position should be closed out at a predefined price that lower than $9,000.

Case 3 (Close a long position with an OCO order)

User C holds a long BTC contract with an average open price of $9,000. He expects to take profits when the market price surges to $10,000 and to stop losses when the market price dumps to $8,000. Then the user C can place an OCO order according to the following parameters:

【TP trigger price】$10,000

【TP order price】 Select market price (or enter prices like 9,950)

SL trigger price】$8,000

SL trigger price】Select market price (or enter prices like 7,950)

T/P will be triggered if the price pop up to $10,000, and the user can exist the trade at market price instantly (If the preset order price is 9,950, then close at 9,950),meanwhile, the S/L settings will be invalid.

Case 4 (Close out with an OCO order)

User D holds a short BTC contract with an average price of $9,000. He expects to take profits when the market price drops to $8,000 and to stop losses when the market price surges to $10,000. Then the user D can place an OCO order according to the following parameters:

【TP trigger price】$8,000

【TP order price】 Select market price (or enter prices like 8,050)

SL trigger price】$10,000

SL order price】Select market price (or enter prices like 10,050)

T/P will be triggered if the price drops to $8,000, and the user can exist the trade at market price instantly (If the preset order price is 8,050, then close at 8,050),meanwhile, the S/L settings will be invalid; S/L will be triggered if the price grows to $10,000, and the user can exist the trade at market price instantly(If the preset order price is 10,050, then close at 10,050),meanwhile, the T/P settings will be invalid.

Case 5( Open a long position with conditional order):

The current market price of BTC contract is $11,500, and user E believes that the market will turn bullish if the BTC contract price pushes through the $12,000 level. Then the user E can place a conditional order according to the following parameters:

【Trigger price】$12,000

【Order price】 Select market price(or enter prices like $12,050)

If the price rallies to $12,000, a long order will be triggered and placed at market price (or $12,050).

OCO orders can also be placed for opening a long position bilaterally. A bullish action will be triggered at the higher price while a reverse order will be triggered at the lower price.

Case 6(Open a short position with a conditional order):

The current market price of BTC contract is $6,500, and user F believes that the market will turn bearish if the BTC contract price breaks through the $6,000 level. Then the user F can place a conditional order according to the following parameters:

【Trigger price】$6,000

【Order price】 Select market price(or enter prices like $5,950)

If the price goes down to $6,000, a short order will be triggered and placed at market price (or $5,950).

OCO orders can also be placed for opening a short position bilaterally. A bearish action will be triggered at the lower price while a reverse order will be triggered at the higher price.

Stop-order settings and trigger rules

Note:

3. If the order is filled, your existing position will be closed or a new position will be opened. If the order fails to be filled, your position and margin will still exist.

4. When the order is activated as the trigger condition is met, if the predefined order price exceeds the price limit, the system will place the order with the highest or lowest market price at the time of activation.

5. There will be different restrictions on the order amount of single stop – market order for different contracts (the restrictions will be adjusted according to market changes)