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What's That Stop Order Professional Traders Use?

3 months ago

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Greetings from MCS, the derivatives trading platform where traders ALWAYS come first.

   

   

     

In addition to MCS's basic order types (market and limit order), there are conditional orders favored by professional traders.

   

This post will describe these types of conditional orders that help a richer trading experience.

   

   

   

MCS's conditional orders, which offer a wide variety of trading features in addition to the basic orders, are:

   

1) Stop Order

2) Stop-Loss Order

3) Take-Profit Order

4) Trailing Stop

   

   

Stop Order

     

A stop order, a kind of conditional order, is an order to buy/sell when the price reaches a specified trigger price. When the trigger price is reached, the stop order converts to a market or limit order.

     

Stop orders are often used by traders to:

     

     

* Breakout Market: a market where the price moves in a relatively narrow range of boxes and then rises/falls through the previous highest / lowest point

     

   

     

Here is an example for a better understanding.

   

Stop orders can be well utilized when the trader anticipates that the price will go beyond the resistance or support level (breakout). In case of a breakout, the trigger price of buy and sell orders must be higher or lower than the market price (Last/Index/Mark), respectively.

   

   

Buy Stop Order

   

Currently, the BTC/USDT Last Traded Price is 7,000 USDT with a resistance price of 7,500 USDT. David would like to place a buy stop order when the price breaks through 7,500 USDT to capture the sudden incline in price. In order to do so, the following steps can be used with stop orders.

     

   

     

Sell Stop Order

   

Currently, the BTC/USDT Last Traded Price is 7,000 USDT with a support price of 6,500 USDT. David would like to place a short stop order when the price breaks through 6,500 USDT to capture the sudden decline in price. In order to do so, the following steps can be used with stop orders.

     

     

Note: If a stop limit order is used in a volatile market, there lies a possibility that the order may not be executed as the price may have already passed limit price. On the other hand for market orders, traders must keep in mind that in a volatile market, it may lead to an undesired average execution price as it takes the best available market price.

   

   

       

Stop-Loss Order

     

Stop-loss orders are automatic trade orders given by the trader to trigger a close when a certain price(loss) level is reached to minimize losses. MCS provides a simple close position strategy at the point of position entry to close all open positions with a market order. If the trader desires to close the position partially or with a limit order, the conditional order can be used to place a stop-loss limit order. The stop-loss order price is set against the last traded price.

   

There are 3 ways you can set Stop-Loss Orders on MCS.

   

1. When submitting a market or limit order (Only applies to traders without a position)

     

2. On the Position List

     

3. As Conditional Market and Limit Order

   

   

     

Take-Profit Order

   

Take-Profit Order is a function to close the position when the market price reaches a particular trigger price.

   

There are 3 ways you can set Take-Profit Orders on MCS.

   

1. When submitting a market or limit order (Only applies to traders without a position)

     

     

2. On the Position List

       

     

One-click setup on the position list

     

3. As Conditional Market and Limit Order

   

   

     

Trailing Stop

   

A Trailing Stop Loss Order automatically adjusts the Stop Loss Price by referring to the preset price interval (minimum 0.5 USDT) when the market price moves in a favorable direction for the position held by the trader. In other words, as the price moves to a more favorable position, the stop-loss price line moves together to preserve the profit. If the price fluctuates, it can be useful for realizing traders' profits and minimizing losses.

   

<Trailing Stop Order Example>

   

David currently holds a BTC/USDT long position. The current market price is 10,000 USDT with a trailing distance set to 500 USDT.

   

If the market price has not reached 10,000 USDT before the price drops to 9,500 USDT, then the trailing stop will activate the stop loss order at 9,500 USDT as usual.

   

When the market price rises to 11,000 USDT, the trailing stop raises the stop price to 10,500 USDT (keeping the 500 USDT price gap from the current market price) and places a trailing stop loss order when the market price drops to 10,500 USDT.

     

The Stop-Loss price is automatically raised according to the market price, and the Stop Loss order is activated only after returning to the 500 USDT price interval starting from the highest price.

   

In this post, we looked at conditional orders, MCS's advanced orders. We, MCS, will continue to listen to implement functions that enable traders to truly enjoy trading.

   

       

   

     

Again, traders always come first in MCS.

     

Thank you.

     

     

     

START TRADING

 

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Published 3 months ago