Hi,
I am new to trading Bitcoin (I should say trading in general) and the terminology, and after reading a couple of articles and watching a couple of videos, I still don't have a clear idea how "Stop Order" works.
I will give an example from GDAX's interface and I will appreciate if you could tell me if I got it right:
Let's say I purchased 0.05 BTC when the BTC price was $5000. I surely want to sell it with a profit, but I also don't want to lose too much if the price goes down. On GDAX interface, I select STOP, then I select SELL. I enter 0.05 BTC as Amount, $5050 as Limit Price (under Advanced section), and enter $4950 as Stop Price, and place the sell order.
Is this how a Stop Order for selling is supposed to be done? Will the system sell it at whichever price point (Limit Price or Stop Price) is reached first?
Thank you in advance.
This should explain/confirm.
"For example, let's assume that you own 100 shares of Company XYZ stock, for which you have paid $10 per share. You are expecting the stock to hit $12 sometime in the next month, but you do not want to take a huge loss if the market turns the other way.
You direct your broker to set a stop order at $8.50. If the stock goes up, you will realize all of the benefits. If the stock goes down and touches $8.50, your broker will automatically place a market order to sell your shares.
It is important to note that when the stop order is triggered, it becomes a market order. You will not necessarily receive $8.50 per share; you will most likely receive a little more or a little less."
http://www.investinganswers.com/financial-dictionary/stock-market/stop-order-1216So if it goes up to $5,050 it will sell, and if it falls to $4,950 it will set a market order.