How to place a manual stop loss order on Binance

A Binance stop loss order allows you to specify the execution of an automatic cryptocurrency sell order to limit losses in the event of a market drop. Here’s how to set one up.

Binance is currently the biggest cryptocurrency platform in the world. It offers a sleek and smooth interface with many trading features. Its high level of security is particularly appealing to traders, as their crypto assets are protected to the maximum against price fluctuations. 

What is a stop loss order ?

Traders use the Binance stop loss to schedule the purchase or sale of a cryptocurrency when it reaches a specific price. This type of order also takes into account market fluctuations that bring the price of an asset below the specified price. 

When the condition defined by the trader is met, a sell order is automatically launched by the platform. However, the price applied for the transaction may be different from the one defined by the user. This is because the price of the asset is constantly changing. It is therefore important to understand this difference from a limit order. The latter executes the transaction only at a limit price or higher.

A Binance stop loss order can be set when you expect the price of your crypto asset to fall in the future. This is a safety net that will prevent your portfolio from suffering too many losses if your predictions of a decline actually occur. In the case of BTC, you can for example set up a Binance stop loss order at USD 30,000. This way, if the Bitcoin price falls below or reaches this value, the platform will immediately launch a sell order. The actual selling price, on the other hand, may be slightly lower than $30,000. But this mainly depends on the time frame of the transactions and the price development.

To benefit from a comprehensive strategy, traders combine a Binance stop loss order with a take profit order. This allows the recovery of gains when the price is in an upward trend.

How to set up a Binance stop loss order

In order to place a Binance stop loss order, first open a position in the market of the asset in question. Thus, only traders who own a specific crypto can place this type of order on the adjacent market. Note, however, that on Binance, this order is known as a stop limit. However, if the name differs, the principle remains the same.

Binance stop loss orders step by step

Setting up the Binance stop loss order starts with selecting a cryptocurrency pair that you want to secure. Next, you will have to click on the Stop Limit tab. This will take you to the fields for setting up the order. You will find a field dedicated to the Stop order and another to the Limit order. These are effectively the two components of the Binance stop loss order.

Let's take the example of a trader who has acquired 1 BTC at a price of 31,000 USD. He wants to secure his Bitcoins in case the price drops below 30,000 USD. In the Stop tab, the trader must enter the value 30,000 USD. As soon as the BTC price reaches or exceeds this value, the market order will be launched by the platform. 

However, in the Limit field, the trader will have to specify the price at which he wants to sell. This means that the execution price of the Binance stop loss order and the selling price can be different. Moreover, it is recommended to specify a lower selling price than the order execution price. This is so that the order has time to be placed. For example, the trader can choose a selling price of 29,900 USD.

Many traders choose to always set their stop value a little higher than they expect. In the above case, it would be better to specify 30,500 USD as the stop order. Thus, the sell order is issued at this value and the selling price of the BTC will be 29,900 USD.

However, there is one last field that needs to be filled in to complete the Binance stop loss order: the amount of cryptos you wish to sell. In this example, the trader will indicate 1 BTC. The Binance stop loss tab will then show the entire sale price. To save the changes to the order book, simply click on the "Sell BTC" button.