A Stop Limit Order is a trigger-based order similar to a stop order offered by YAX. Like a stop order, a Stop Limit Order requires you to specify a trigger price. The order will only be triggered when the market price reaches or exceeds the specified trigger price. However, unlike a stop order, a Stop Limit Order will be converted into a limit order instead of a market order when triggered. Therefore, you need to specify a Stop Limit price as the amount of the limit order that the system will place when your order is triggered.
For example, suppose the market price for ETH/USDT is 1600, and you submit a Stop Limit sell order with a limit price of 900 and a stop price of 1000. The order will not be executed immediately. However, when the market price drops to 1000, the system will automatically submit a limit sell order with a limit price of 900.
The Stop Limit Order guarantees the execution price of your order to some extent, but you need to bear the risk of your order not being executed, especially when market liquidity is low. Stop orders and Stop Limit orders also need to comply with the matching engine’s limit rules, which means that the spot execution price cannot be higher or lower than the previously executed trade by 5%. In some cases of extremely low liquidity, your order may not be executed.