A stop-limit order on Binance is a type of order that combines the features of a stop order and a limit order. Here's how it works:
Stop-Limit Order:
1. Stop Price: Set a stop price, which triggers the order when reached.
2. Limit Price: Set a limit price, which is the maximum price you're willing to buy or sell at.
How it Works:
1. When the stop price is reached, the order is triggered.
2. The limit order is then placed at the specified limit price.
Example:
- You want to buy 1 BTC when the price reaches $30,000, but you don't want to pay more than $30,500.
- You set a stop-limit order with a stop price of $30,000 and a limit price of $30,500.
Advantages:
- Control over price: You can set a specific price range for your order.
- Risk management: Stop-limit orders can help limit losses or lock in profits.
Key Considerations:
- Order execution: If the limit price is not reached after the stop price is triggered, the order may not be executed.
- Market volatility: Stop-limit orders may not be suitable for highly volatile markets, as prices can gap beyond the limit price.
When to Use:
- Risk management: To limit losses or lock in profits.
- Entry and exit points: To set specific price levels for entering or exiting a trade.
By using stop-limit orders on Binance, you can refine your trading strategy and better manage your risk exposure.