In contract trading, investors can get the benefits from rising digital currencies by buying long, or from falling digital currencies by selling short. If you predict the BTC price will rise in the future, you can buy BTC (open the position) at a lower price and then sell it (close the position) when the price rises to the expected level. You will gain profits after settling the profit and loss.
Based on the correct market prediction, contract trading can bring us profits; but at the same time, if the market moves against you, losses will be magnified as well. Therefore, it is essential to stop profit and stop loss in contract trading.
You can maximize profit or minimize loss if you know how to reasonably stop profit and loss. Should you fail to stop profit in time when the market price rises to your expectation, the profit would evaporate upon a market decline. The same is true the other way around: should you fail to stop loss in time, you would risk forced liquidation.
Stop order is also known as stopping profit and stopping loss. Now CoinEx supports stop-limit orders. Users can set a stop price, a limit price, and a stop-limit order amount in advance. Once the stop price is reached, the limit order set by the user in advance will automatically enter the market.
How to place a stop order in CoinEx?
Say, a user has opened a position. To stop profit and loss in contract trading, he or she can place a stop-limit order. Here we take two examples for demonstration:
Example 1: Place a buying stop-limit orders in a bullish market
Here we take BTC/USDT for example. After opening a position, a user can click [Perpetual] to enter the contract trading page, and set “Stop-Limit”.
Assume the market price of BTC against USDT is 39,500. If the user believes that 40,000 USDT might be the resistance level and there will be another huge increase, he or she can place the buying order as below:
Once the level of 40,000 USDT is reached, the limit order (say, "buy 0.1 BTC for 40,500 USDT") will be automatically placed at the limit price set.
Example 2: Place a selling stop-limit orders in a bearish market
Assume the market price of BTC against USDT is 40,000. After opening a position, if a user considers that 39,500 USDT is the support price and there will be another big decline, then he or she can place the selling order as below:
Once the 39,500 USDT is reached, the limit order (like "sell 0.1 BTC for 39,000 USDT") will be automatically placed at the limit price set.
Please note that your account should have a sufficient balance before the stop price is reached, or otherwise these orders will not be placed at the limit price set.
Last but not the least, spot trading comes with risks. Only when you learn to stop profit and stop loss can you secure sustainable wealth growth.