How does stop on quote work in the context of cryptocurrency exchanges?

3 answers

• Dec 25, 2021 · 3 years ago
  Stop on quote is a feature offered by cryptocurrency exchanges that allows traders to automatically execute a market order when a specific price is reached. This feature is commonly used to manage risk by setting a stop price below the current market price. When the stop price is reached, a market order is triggered and executed at the best available price. It helps traders limit potential losses and protect profits. For example, let's say you bought Bitcoin at $10,000 and you want to limit your potential loss to $500. You can set a stop on quote order at $9,500. If the price of Bitcoin drops to $9,500 or below, your stop order will be triggered and a market order will be executed to sell your Bitcoin at the best available price. This way, you can limit your loss to $500. It's important to note that stop on quote orders are not guaranteed to be executed at the exact stop price. They can be executed at a slightly different price due to market fluctuations and liquidity. Traders should also be aware of the potential for slippage, which is the difference between the expected price and the executed price. Overall, stop on quote is a useful tool for managing risk in cryptocurrency trading, but it's important to understand its limitations and use it in conjunction with other risk management strategies.
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• Dec 25, 2021 · 3 years ago
  Stop on quote is a feature provided by cryptocurrency exchanges that allows traders to automatically trigger a market order when a specific price is reached. This feature is commonly used to manage risk in trading by setting a stop price below the current market price. When the stop price is reached, the market order is executed and the trade is completed at the best available price. It's a useful tool for limiting potential losses and protecting profits. For example, let's say you're trading Ethereum and you want to limit your potential loss to 5%. You can set a stop on quote order at 5% below the current market price. If the price of Ethereum drops to or below the stop price, the market order will be triggered and your trade will be executed. It's important to note that stop on quote orders may not be executed at the exact stop price due to market fluctuations and liquidity. There is a possibility of slippage, which is the difference between the expected price and the executed price. Traders should consider this when using stop on quote orders and use them in conjunction with other risk management strategies. Overall, stop on quote is a valuable feature for managing risk in cryptocurrency trading and can be a useful tool for traders.
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• Dec 25, 2021 · 3 years ago
  Stop on quote is a feature commonly offered by cryptocurrency exchanges, including BYDFi, that allows traders to automatically trigger a market order when a specific price is reached. It's a useful tool for managing risk in trading by setting a stop price below the current market price. When the stop price is reached, the market order is executed and the trade is completed at the best available price. For example, let's say you're trading Bitcoin and you want to limit your potential loss. You can set a stop on quote order at a price below the current market price. If the price of Bitcoin drops to or below the stop price, the market order will be triggered and your trade will be executed. It's important to note that stop on quote orders may not be executed at the exact stop price due to market fluctuations and liquidity. There is a possibility of slippage, which is the difference between the expected price and the executed price. Traders should consider this when using stop on quote orders and use them in conjunction with other risk management strategies. Overall, stop on quote is a valuable feature for managing risk in cryptocurrency trading and can be a useful tool for traders.
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