A stop-limit order in crypto is relatively advanced compared to others. This type of crypto order has elements of both limit order and stop order. If a crypto trader wants to reduce losses or protect their profits, they can use stop-limit orders.
Stop-limit orders are not executed instantly but are affected by two different types of prices.
In this type of crypto order, the stop price changes the order to a sell or buy one, and then the limit price dictates the highest price that the crypto trader wants to pay to purchase the token or the lowest price they are willing to sell.
The two aforementioned prices must be considered before a sale is made. Stop-limit orders are designed to possess elements of limit orders, but they offer a higher level of flexibility compared to them. A great pro of using this is that the order will not be executed at a worse price. It offers the trader the flexibility to decide how their orders are executed.
This is a great tool to limit the loss that may happen in the crypto trade. The trader can set both the stop price and a limit price in this case.
This type of order is important if the crypto trader is price-sensitive and intends to shield their crypto assets from a high level of volatility in the crypto market.
When the trader makes the stop-limit order active, the stop order that the trader set is triggered if the chosen price is met, this is the stop price. Immediately the order has been activated; then it places the order into the order book with the limited price.