Article

How to Use Trigger Order

okx learn
OKX Learn
2020.08.19

1.What is a trigger order?

Trigger order is a kind of algorithm trading strategy by which users can predefine the trigger price and the market 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 or taking profit. A trigger order will not freeze the margins or positions, which is the only difference from a stop order.

The trading interface of trigger order is as follows:

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.How to use a trigger order?

Case study

Case 1 (Close a long position for stop-loss):

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 trigger 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 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 for stop-loss)

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 trigger 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( Open a long position with trigger order):

The current market price of BTC contract is $11,500, and user C believes that the market will turn bullish if the BTC contract price pushes through the $12,000 level. Then the user C can place a trigger 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).

Case 4(Open a short position with a trigger order):

The current market price of BTC contract is $6,500, and user D believes that the market will turn bearish if the BTC contract price breaks through the $6,000 level. Then the user D can place a trigger 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).

Trigger order settings and trigger rules

Note:

1.Positions and margin will not be frozen until the stop order is triggered.

2.The Trigger Order may not be triggered successfully, and the order may fail to be placed due to the factors such as price restrictions, position restrictions, insufficient margin, being in a non-trading status, and system errors. Just like the ordinary limit orders, the successfully triggered limit orders may not be filled. The unfilled limit orders will be displayed in the [Open Order] section.

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)