What is a Stop Order?

A stop order, also known as stop-loss order, is used when you are unable to monitor your trading for a period of time, and want to prevent a loss if the market moves against you (e.g., the selling price falls too low or the buying price rises too high). A stop order is the opposite of a limit order, or take-profit order, which is used to protect a gain.

Stop orders are normally used by traders who want to take advantage of price breaks and momentum in a given direction, allowing them to buy if the price is rising or sell if price is falling. The parameters required from the trader are as follows:

1. Direction: The nature of the order, specified as buy or sell, e.g., a Buy Stop vs. a Sell Stop order.
2. Stop Price: The price at which the order is triggered. An order is not filled until the designated price is reached..
3. Size: The amount of tokens to be bought or sold, e.g., 1,000 QASH.

For example, you borrowed from QUOINE 1 BTC and sell at $15,000 USD. You need to buy 1 BTC to pay back to QUOINE yet you don’t want to lose more than $2,000 USD for this trade if the market price goes up. What you can do is to make a stop buy order at $17,000 USD.

So when the market price goes up and ask price goes up to $17,000 USD, the stop order is triggered and a buy market order is automatically placed. Then, you can buy BTC at $17,000 USD to pay back to QUOINE, given you already made 15,000 for selling BTC previously, overall, you will lose only $2,000 USD.

The QUOINE Order Matching System (OMS) currently implements stop orders using market orders, i.e., a market buy order is triggered once it detects that the $17,000 USD price (in the above example) threshold is crossed.

A sell stop order works in a similar fashion as a buy stop order, but in the opposite direction.

For example, you already bought 1 BTC at $15,000 USD. You don’t want to lose more than $2000 USD for this trade if the market price goes down. What you can do is to make a stop sell order at $13,000 USD.

So when the market price goes down and bid price drop to $13,000 USD, the stop order is triggered and a sell market order is automatically placed.

If the market price is above the price specified for a buy stop order, systems usually reject these requests. However, some systems do allow such orders, along with a warning to the user. These are executed immediately as market orders.

How to place a Stop Order from a Spot Position:

1. From the Main Menu, click Dashboard.
2. Click SPOT at the top right corner of the page to switch to spot market.
3. In the panel on the left of the page, click Stop.
4. Choose your price and quantity. Note that a stop order is the opposite of the limit order, meaning the price must be higher than market price for a stop buy order, and vice versa for a stop sell order.
5. Click Buy or Sell to submit.
6. A popup confirmation will ask you to confirm the order you are about to make. Click Confirm to agree that you will place the order, or Dismiss to stop the action. If you click Confirm, the next popup will confirm that the order has been placed successfully. Click Dismiss again.
7. You can monitor your orders in the Orders panel (under the chart if using the horizontal layout, or right of the chart if using the vertical layout).

How to place a Stop Order from a Margin Position:

1. From the Main Menu, click Dashboard.
2. Click MARGIN at the top right corner of the page to switch to margin market.
3. In the panel on the left of the page, click Stop.
4. Choose your price and quantity. Select the leverage rate and trading mode.
5. A stop order is the opposite of the limit order, meaning the price must be higher than market price for a stop buy order, and vice versa for a stop sell order.
6. QUOINE offers leverage rates from 2x to 25x. At 25x, you will be asked to confirm that you are aware of the high rate and the profits/losses that can result from margin trading.
7. For Mode, QUOINE offers One-Direction and Two-Direction trading modes. In One-Direction, once you place a long or short order, the next order you place can only be in the same direction (long for long, short for short). In Two-Direction, the next order you place can be in the opposite direction.
8. Click Buy or Sell to submit.
9. A popup confirmation will ask you to confirm the order you are about to make. Click Confirm to agree that you will place the order, or Dismiss to stop the action. If you click Confirm, the next popup will confirm that the order has been placed successfully. Click Dismiss again.
10. If your order is fully filled, it will not show up under the default view of Orders panel (“Live” status). You can change the Orders panel filter to the “All” status to see the order, or simply switch to the Positions panel for better monitoring.

Notes:

When entering a stop order, traders must provide the order’s price, quantity, and size. This order type is not sent to the Matching Engine (ME) immediately. A background process called StopOrderWatcher will check the current best price to decide whether or not to trigger the order. When the stop order is triggered, it is sent to the ME and the OMS treats it as market (not market with range) orders.