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Your stop is at 59,400. Where does it fill?For a 0.01 BTC positionSlow fallTrigger 59,400Fills at 59,3900.10 USDT extra lossFast fallTrigger 59,400Fills at 59,2002 USDT extra loss
Your stop is at 59,400.Where does it fill?For a 0.01 BTC positionSlow fallTrigger 59,400Fills at 59,3900.10 USDT extra lossFast fallTrigger 59,400Fills at 59,2002 USDT extra loss

Same stop, two falls. The book decides the fill.

Stop orders

A stop order waits for a trigger price, then becomes a normal order that trades in the book.

Lesson 5 of 75 min3 parts

Updated . Cryptathon rules checked on .

A stop order waits until the price reaches a trigger price you set, then becomes a normal order. A stop-market trades at the best prices in the book, so it can fill past the trigger. A stop-limit trades only at its limit price or better, so it may not fill. On Cryptathon your stops are the take-profit and stop-loss exits.

By the end, you can

  1. 1Place a stop trigger for a long or a short
  2. 2Say what a stop-market and a stop-limit do in a fast move
  3. 3Work out the average fill of a stop that walks the book

1 of 3

When does a stop order trigger?

A stop order waits until the price reaches a level you choose, the trigger price, and then becomes a normal order. A stop-market order then trades at once at the best prices in the book; a stop-limit order becomes a limit order that trades only at your price or better.

Before the trigger, a stop does nothing. It is not in the order book and nobody can trade with it. Most traders use a stop to get out of a position when the price goes against them.

Worked example

A stop below a long

You hold a long of 0.01 BTC from 60,000 USDT. You want to get out if BTC falls 1%. Where is the trigger, and what is the loss if it fills there?

  1. 1
    Find the size of the fall1% of the entry price.
    60,000 × 1% = 600 USDT
  2. 2
    Take it from the entryA long loses when the price falls, so the stop sits below.
    60,000 − 600 = 59,400 USDT
  3. 3
    Find the loss at the trigger600 USDT a BTC on 0.01 BTC.
    600 × 0.01 = 6 USDT

AnswerThe trigger is 59,400 USDT. If the stop fills exactly there, you lose 6 USDT. A stop to exit a short sits above the price instead.

BTC price, USDT60,20060,00059,80059,60059,40059,200Trigger 59,400EntryThe stop waitsIt fires: sell
BTC price, USDT60,20060,00059,80059,60059,40059,200Trigger 59,400EntryThe stop waitsIt fires: sell
Figure 1 The stop waits while BTC moves above 59,400. When the price reaches the trigger line, the stop fires and becomes a sell order.
Your turn You hold a SOL short from 150 USDT. You want a stop that gets you out if SOL rises 2%. Where is the trigger?
  1. 147 USDT

    That is 2% below. A short loses when the price rises, so its stop sits above the entry.

  2. 153 USDT

    Right. 150 × 2% = 3 USDT, and 150 + 3 = 153 USDT.

  3. 152 USDT

    That is 2 USDT, not 2%. 2% of 150 is 3 USDT.

  4. 150.02 USDT

    You read 2% as 0.02 USDT. 2% of 150 is 3 USDT.

Show the answer

B: 153 USDT. 150 × 2% = 3 USDT, and 150 + 3 = 153 USDT.

2 of 3

What is the difference between stop-market and stop-limit?

In perpetual futures, most exchanges give you two kinds of stop. They wait the same way. The difference is the order they become.

  • A stop-market order becomes a market order. It tries to trade against the orders in the book; the fill price, and a full fill, are not guaranteed.
  • A stop-limit order becomes a limit order at a limit price you set. It trades only at that price or better. You know the price, but you may not get out.

The difference shows when the price moves fast and jumps past your levels.

Worked example

A fast fall

Your long of 0.01 BTC is from 60,000. The trigger is 59,400. In one second BTC drops to 59,200, then keeps falling to 58,800. Compare a stop-market with a stop-limit that has a limit price of 59,300.

  1. 1
    Stop-market: find the fall to the fillIt sells at once at the best bid, now 59,200.
    60,000 − 59,200 = 800 USDT
  2. 2
    Stop-market: find the lossThe position is closed, so the loss stops here.
    800 × 0.01 = 8 USDT
  3. 3
    Stop-limit: find the fall so farIts sell at 59,300 waits above the price, so nothing fills.
    60,000 − 58,800 = 1,200 USDT
  4. 4
    Stop-limit: find the open lossThe position is still open, and the loss grows if BTC keeps falling.
    1,200 × 0.01 = 12 USDT

AnswerThe stop-market closes you with an 8 USDT loss, 2 USDT more than at the trigger. The stop-limit misses: you still hold the long, 12 USDT down.

BTC price, USDT60,00059,60059,20058,800Trigger 59,400Stop-limit sell waits at 59,300Stop-marketsells at 59,200Stop-limit still open at 58,800
BTC price, USDT60,00059,60059,20058,800Trigger 59,400Stop-limit sell waits at 59,300Stop-marketsells at 59,200Stop-limit still open at 58,800
Figure 2 BTC jumps from above the 59,400 trigger to 59,200. The stop-market sells there. The stop-limit's sell at 59,300 is now above the price and waits while BTC falls to 58,800.
Your turn Which stop becomes a market order when it triggers?
  1. The stop-market

    Right. It tries to fill against the orders in the book. A stop-limit becomes a limit order instead.

  2. The stop-limit

    A stop-limit becomes a limit order at the limit price you set. It trades only at that price or better.

  3. Both of them

    They wait the same way, but only the stop-market becomes a market order.

  4. Neither of them

    A stop does become an order when it triggers. The stop-market becomes a market order.

Show the answer

A: The stop-market. It tries to fill against the orders in the book. A stop-limit becomes a limit order instead.

3 of 3

How do stops work on Cryptathon?

On Cryptathon you trade with market orders, limit orders, and take-profit and stop-loss on a position. There is no stop order on its own. Your exits are the stops: each exit is a reduce-only stop-market order that fires when the mark price reaches your level. You set them as a take-profit and a stop-loss on an open position.

The trigger watches the mark price. The order it becomes trades in the order book, against the bids that are there at that moment. In a slow move the best bid is close to your level. In a fast move the bids near your level may be gone, so the fill can be well past it.

One more rule: if a stop only part-fills, a new stop is sent for the rest until the position is closed.

Worked example

Why the fill is past the trigger

You hold a long of 0.02 BTC with a stop-loss at 59,400. The mark price reaches 59,400. The book has 0.01 BTC bid at 59,380 and 0.01 BTC bid at 59,350. What is your average fill?

  1. 1
    Sell to both bidsThe best bid first, then the next one down.
    59,380 × 0.01 + 59,350 × 0.01 = 1,187.3 USDT
  2. 2
    Find the average priceTotal USDT divided by total BTC.
    1,187.3 ÷ 0.02 = 59,365 USDT
  3. 3
    Compare it with the trigger35 USDT a BTC below your level.
    59,400 − 59,365 = 35 USDT
  4. 4
    Find what that costs youOn your 0.02 BTC.
    35 × 0.02 = 0.7 USDT

AnswerYou sell at an average of 59,365, which costs 0.70 USDT more than a fill at exactly 59,400. A faster fall with fewer bids costs more.

Bids in the book when the stop firesTrigger 59,40059,3800.01 BTCyou sell 0.0159,3500.01 BTCyou sell 0.0159,3000.03 BTC, not reachedAverage fill: 59,365, 35 USDT under the trigger
Bids in the book when the stop firesTrigger 59,40059,3800.01 BTCyou sell 0.0159,3500.01 BTCyou sell 0.0159,3000.03 BTC, not reachedAverage fill: 59,365,35 USDT under the trigger
Figure 3 The bids under the 59,400 trigger. Your 0.02 BTC sell takes 0.01 at 59,380 and 0.01 at 59,350, so the average fill is 59,365.
Your turn Your stop-loss on a SOL long is at 140 USDT, for 1 SOL. The mark price reaches 140. The book has 0.5 SOL bid at 139.90 and 0.5 SOL bid at 139.80. What is your average fill?
  1. 140 USDT

    That is the trigger. The order then sells to the bids in the book, which are lower.

  2. 139.90 USDT

    That is only the best bid. It holds 0.5 SOL, so the rest sells at 139.80.

  3. 139.85 USDT

    Right. 139.90 × 0.5 + 139.80 × 0.5 = 139.85 USDT for 1 SOL.

  4. 139.80 USDT

    That is the last bid your order reached. Half of the SOL sold higher, at 139.90.

Show the answer

C: 139.85 USDT. 139.90 × 0.5 + 139.80 × 0.5 = 139.85 USDT for 1 SOL.

Common questions

Can one odd trade set off your stop?

Not by itself. On Cryptathon take-profit and stop-loss exits fire when the mark price reaches your level, not on the last trade. The mark price is the index price plus a smoothed premium from the order book, held within 1% of the index. The smoothing limits what one trade can do, but a stop still fires if the mark crosses its level.

Is a stop-loss the same as a stop order?

A stop-loss is one use of a stop order: a stop that closes your position when the price reaches a level of loss. A take-profit is a stop too, set at a level of gain. On Cryptathon each exit is a reduce-only stop-market order that fires when the mark price reaches your level. For a 0.01 BTC long from 60,000, a stop-loss at 59,400 and a take-profit at 61,800 are both sells of 0.01 BTC.

Does a stop order cost a fee?

Nothing is paid while a stop waits, because nothing has traded. When it fires, the order it becomes pays the trading fee on the size that trades. On Cryptathon an exit pays the taker fee, because the exit trades as a market order. A stop-loss that sells 0.01 BTC at 59,400 trades 594 USDT, so the fee is 594 × 0.05%, about 0.30 USDT.

Check yourself

Three questions on the whole lesson.

Question 1 of 3 A stop-limit sell has its trigger at 59,400 and its limit at 59,300. BTC falls from 60,000 straight to 59,100 and stays there. What happens?
  1. It sells at 59,400

    No order is sure to fill at its trigger. This one becomes a limit sell at 59,300.

  2. It sells at 59,300

    A limit sell trades at 59,300 or better. With BTC at 59,100, nobody buys at 59,300.

  3. It triggers but does not fill

    Right. Its sell waits at 59,300, above the price, so the position stays open.

  4. It never triggers

    BTC went through 59,400, so the stop triggered. It is the limit that stops it filling.

Show the answer

C: It triggers but does not fill. Its sell waits at 59,300, above the price, so the position stays open.

Question 2 of 3 On Cryptathon, which price fires your take-profit or stop-loss?
  1. The last trade price

    One trade can print a spike. The trigger uses the mark price.

  2. The mark price

    Right. Each exit fires when the mark price reaches your level.

  3. The best bid in the book

    The bids decide the fill price, not the trigger.

  4. Your entry price

    The entry is where you started. The trigger is the level you set.

Show the answer

B: The mark price. Each exit fires when the mark price reaches your level.

Question 3 of 3 Your stop-loss for 0.03 BTC fires, but only 0.01 BTC fills before the bids at that moment run out. What does Cryptathon do next?
  1. It cancels the rest

    The rest of the position would have no exit. Cryptathon keeps going.

  2. It closes the rest at your trigger price

    No stop-market promises a price. The rest trades in the book.

  3. It sends a new stop for the other 0.02 BTC

    Right. A new stop goes out for the rest until the position is closed.

  4. It opens a short for the other 0.02 BTC

    Exits are reduce-only, so they can only make the position smaller.

Show the answer

C: It sends a new stop for the other 0.02 BTC. A new stop goes out for the rest until the position is closed.

What to remember

  1. When does a stop order trigger?A stop does nothing until its trigger price; then it becomes a normal order.
  2. What is the difference between stop-market and stop-limit?A stop-market puts the exit first. A stop-limit sets the worst price you accept, but it may not fill.
  3. How do stops work on Cryptathon?On Cryptathon your exits are stop-market orders that fire on the mark price, so in a fast move expect a fill a little past your level.
Next lessonTake-profit and stop-loss