🟢There is a type of order called Stop-limit.

It is a type of order used in digital currency trading, which enables the trader to specify a specific price point to execute a buy or sell operation.

- This command is used to control risks.

- It allows the trader to execute buy or sell operations automatically when the market reaches a specific price point.

💧 Components of the Stop-Limit order:

1️⃣- Stop price:

- It is the price at which, when the market reaches it, the limit order is activated.

2️⃣- Limit price:

- It is the price at which the trader wants to buy or sell the currency after activating the Stop order.

3️⃣- Quantity:

- The number of units that the trader wants to execute in the purchase or sale process.

❄️ Illustrative example:

It is commonly used in the case of selling, but it is sometimes used in the case of buying as well.

🔢- In case of sale: 🔴

- If the trader owns a currency whose current price is $100

- He wants to limit losses in case the price drops,

- He can specify the Stop-Limit command as follows:

- Stop price: $90.

- Limit price: $88.

- This means that the sell order will be automatically triggered when the price drops to $90 or below,

- But it will sell for no less than $88.

🔢- In case of purchase: 🟢

- If the current currency price is $100

The trader expects the price to rise if it exceeds $110.

- He can specify the Stop-Limit command as follows:

Stop price: $110.

- Limit price: $112.

- This means that the buy order will be automatically activated when the price reaches $110.

- But the currency will not be purchased at a price higher than $112.

⭐️ Benefits of using Stop-Limit orders:

🥇- Risk management:

- This type of order is used to protect capital from large losses by setting certain prices to sell if prices fall.

🥈- Earning profits:

- It helps in executing buying or selling operations when achieving the desired profit without the need to monitor the market continuously.