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#5314
JustinJustin
Moderator

That article you linked is actually pretty good (and better than Coinbase’s own description).

When you set a Stop, you must set the Stop Price. This means if the price drops below that level, Coinbase will try to sell your position.

Let’s say you buy at $100 and set your stop at $90.

If the market is moving down really quickly, it could potentially go below $90 before your order can be completed. So you could potentially end up have your order filled at $80 instead of $90.

To protect against going too far down, you can also enter a Limit Price. The Limit Price would always be lower than your Stop Price.

The Limit is what you won’t sell below.

Let’s now say you buy at $100, set your stop at $90, and your limit at $85.

The market drops FAST.

In this case it gets to $80 before Coinbase can sell your position. Since it’s below your limit, it won’t sell and you’ll still have your position.

Now you’ll have to decide what to do. The market could bounce back. Or it could continue dropping and your unrealized loss would continue to worsen.

Does that help?

Here’s a pretty good description too: That article you linked is actually pretty good (and better than Coinbase’s own description).

When you set a Stop, you must set the Stop Price. This means if the price drops below that level, Coinbase will try to sell your position.

Let’s say you buy at $100 and set your stop at $90.

If the market is moving down really quickly, it could potentially go below $90 before your order can be completed. So you could potentially end up have your order filled at $80 instead of $90.

To protect against going too far down, you can also enter a Limit Price. The Limit Price would always be lower than your Stop Price.

The Limit is what you won’t sell below.

Let’s now say you buy at $100, set your stop at $90, and your limit at $85.

The market drops FAST.

In this case it gets to $80 before Coinbase can sell your position. Since it’s below your limit, it won’t sell and you’ll still have your position.

Now you’ll have to decide what to do. The market could bounce back. Or it could continue dropping and your unrealized loss would continue to worsen.

Does that help?

Here’s a pretty good description too: https://www.reddit.com/r/BitcoinMarkets/comments/bnptw3/question_about_stoplimit_price_coinbase_pro/