Limit Order vs Stop Order: Differences Explained & How to Use Them

Last Updated: April 29, 2022

Limit Order vs Stop Order: How do you use them and what is the difference anyway? In this article, I’m going to break down the fundamental differences between a limit and stop order and how trading tools can maximize the potential of these trading options.
Limit Order vs. Stop Order
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Limit Order vs Stop Order

The crypto market has opened up vast investment opportunities over the years and is relatively volatile compared to the stock exchange.

In addition, some elements of trading are similar between the two, such as buying, selling, and other options such as the limit order and the stop order.

In this article, I’m going to break down the fundamental differences between a limit order vs stop order and how trading tools can maximize the potential of these trading options.

Limit Order vs Stop Order: What Is A Limit Order?

If you prefer to plan ahead to avoid missing an investment opportunity, limit orders are a great way to ensure your order is processed at the exact price point you’re looking for.

You can choose to set a limit order to buy or sell an asset at a specific minimum price; if the market price reaches your desired price, your order will be processed automatically. 

At the same time, you could end up missing an opportunity if the market price doesn’t end up reaching your desired target.

In that case, your order won’t ever process. This could be detrimental for those who like to ‘set it and forget it.

Nevertheless, there are a few variations to limit orders, and it’s essential that you understand how each of them works for the overall health of your portfolio.

How Does A Limit Sell Order Work?

With a limit-sell order, you’ll hold onto your investment until your sell price is met.

These can be placed in anticipation of an increase or decrease of the asset and can be an excellent way to stay one step ahead if you aren’t able to keep your eyes glued to the market all the time.

Additionally, limit-sell orders help minimize loss if your investment doesn’t perform how you thought it would.

How Does A Limit Buy Order Work?

In a very similar fashion to limit sell orders, limit buy orders are a great trading tool to get into a new investment at the best price or stock up on an existing asset at the most financially conscious increments. 

The purpose of this is to increase the value of your asset and portfolio while maximizing the return on your initial investments.

Once again, it’s a great trading tool for the crypto market as it never sleeps, and many volatile moments of opportunity could well happen while you’re sleeping.

Differences Between Placing A Market Order and Limit Order

Limit order vs stop order: cryptocurrency market

With a standard market order, you’re able to buy cryptocurrency at its current market value immediately.

This trading method is one of the fastest and most time-efficient ways to buy cryptocurrency, but that doesn’t mean you’re getting the best price.

When you place a limit order, you can set a specific price threshold, and your order will be activated at a price below or equal to your limit price and no higher.

Limit Order vs Stop Order: What Is A Stop Order?

Stop orders have a bit more flexibility, and whether you’re buying or selling, the orders won’t process until the stop price has been met.

These are used in many cases to minimize loss.

You could buy crypto at a specific price and place a stop order for a lower price so that you can sell the cryptocurrency automatically, reducing the hit to your portfolio.

In some cases, it can be wise to use limit and stop orders together and create somewhat of a sweet spot for your investment to minimize risk and increase in value.

Considering the hectic nature of the cryptocurrency market, it’s wise to put these orders in place, as it’s a 24-hour financial market, and you can’t always have your eyes on your portfolio.

Outside of your standard safety measures for buy and sell orders, more technical options, such as trailing orders, provide even more flexibility.

How Do I Use A Trailing Order?

Trailing orders are best used with a dash of hindsight, market knowledge, and gut instinct. No matter if you’re looking to buy or sell, a trailing order allows you to set a target price.

Once this target is met, the trailing order will then activate a limit order that will “trail” the target price as it changes.

Using this tool is an excellent idea for a buy order if you think the price may be going down for a while.

You can set the trigger price below the coin’s current price, in addition to a trailing percentage that will always be above the asset’s lowest current price at any time. 

This allows you to buy into an asset at the best possible cost without losing value by missing an opportunity.

In a way, it will enable you to “bottleneck” your order into a window that provides the best return on investment.

Moreover, trailing orders can go the same way when you’re trying to sell an asset to cash out and are a great choice if you feel an asset may continue to increase.

Even with these trading functions’ efficiency, they can still be challenging to manage for many individuals.

If you’re looking to streamline this process, a few trading bots can help you optimize your orders and crypto portfolio.

Which Trading Bots Are The Best?

Now you know the differences between limit order vs stop order, its time to think about your trading tools.

Although trading bots are extremely useful, you want to make sure you’re only working with the best.

You’ll find a long list of company’s online that offer trading bots, but not all are equally as functional or accurate in their trading calls.

A trading bot that doesn’t miss a single call is essential, and it’s also vital that the bot you choose gives you the flexibility to place many different trading options, not just buy and sell orders.

Below are three of the best trading bots to use for the cryptocurrency market.

Pionex

Pionex

With the ever-changing volatility and trading strategies in the cryptocurrency market, it isn’t uncommon to feel like you could use a little help optimizing or managing your portfolio.

Some people also feel like they may not have the expertise to build a successful crypto portfolio or avert the various risks that come with it.

With the continuous evolution of AI and bot technology, there are other options outside of hiring a broker or financial expert.

Dionex offers sixteen different trading bots to suit your various investment needs, and they come with tons of flexibility.

Their Grid Trading Bot will help you sell high and buy low, and it only comes with a small 0.05% fee.

The platform also boasts its level of internal security, and they’re transparent about how they keep you and your investments secure.

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You may be skeptical, but you can quickly reach out to customer support if you have any questions.

They also have their own trading and marketing information on the website, so all you have to do is sign up and log-in to your account, and you can utilize all of the features they provide in one place.

They also have a buzzing community section that allows you to stay up to date on all companies’ developments and what other users are discussing.

You can connect with Pionex’s community through various social mediums such as Telegram, Discord, Reddit, and more.

Among the other trading bots on this list, Pionex offers one of the most risk-free platforms that you can find.

Instead of requiring a monthly subscription, they have various percentage models regarding specific trades, which could be more ideal for some traders.

They also work hard on keeping their community updated with essential changes in the crypto space so they can adjust their bot’s parameters accordingly. 

CoinRule

Coinrule

Offering a simplified and more hands-off approach, CoinRule offers expert trading strategies, in addition to their automated trading bot.

Not only can they make the best calls for your portfolio, but you really want to have to do much other than check-in and watch the progress.

It is important to note that they offer a free subscription or a paid subscription with three different tiers.

You can find a short breakdown of their differences below.

Free Version:

  • Onew-view portfolio
  • One-click trading
  • 24/7 cloud-based strategies
  • Basic execution speed
  • Two live rules
  • Multiple trading pairs per rule
  • And much more

Hobbyist Tier ($29.99/mo):

  • Everything the free tier offers and more
  • 40 template trading strategies
  • Two connected exchanges
  • Up to 300k in monthly trading volume
  • Advanced indicators and operators

Trader Tier ($59.99/mo):

  • Enjoy everything included in the free and hobbyist tiers
  • 15 live trading rules
  • Unlimited template strategies
  • Three connected exchanges
  • Up to $3 million in monthly trading volume
  • One on one training sessions
  • TradingView integration
  • And much more

Pro Tier ($449.99/mo):

  • Enjoy every single perk that CoinRule has to offer
  • 50 live trading rules
  • Unlimited template strategies, connected exchanges, and monthly trading volume
  • Live Telegram and text notifications
  • Ultra-fast order execution
  • Dedicated server
  • And a long list of additional features

The company truly aims to be all the help you’ll need to navigate the crypto market safely and effectively.

Every trading bot offers its own unique features and characteristics, and it’s vital that you work with a company that has your portfolio’s best interest in mind.

You can also find plenty of information regarding their team members and all of their associated fields of expertise.

If you’re looking to step up your crypto game, CoinRule is a great place to get started.

Bitsgap

Bitsgap

It’s always best to expand your horizons when it comes to investments, and if you want to use a bot to help with your trading strategies and time management, you don’t want to only rely on the first option you come across.

As stated earlier, each bot comes with its own specifications, and Bitsgap has plenty to offer cryptocurrency traders.

Working with their bot will allow you to get an advantage on the volatility of the market while placing orders one step ahead of a potentially lost opportunity.

You also have the ability to utilize their bot across twenty-five different exchanges, ensuring you always get the best price with the most efficient management of your portfolio.

Additionally, before you set your orders, you can always test the functionality of the bot before putting it into action.

Bitsgap is an excellent choice if you like to have a versatile portfolio and work within more than a handful of exchanges at once. 

The company does provide a 7-day free trial for you to test out their products before committing to a subscription.

They also offer three different tiers for paid subscriptions, including an increasing number of features and benefits for traders.

You can also enjoy a decent discount of 17% on your subscription if you choose to be billed on a bi-annual basis.

You can choose between their Basic, Advanced, and Pro plans, all of which cover a wide variety of trading needs.

All of their plans include the following benefits:

  • 25+ supported exchanges
  • Scaled, stop limit, stop, shadow, TWAP, OCO, Market, and limit orders
  • Cloud trading 24×7 x365
  • Demo practice mode
  • Premade trading bot strategies
  • Email and live chat support
  • Fully automatic portfolio
  • Over 175 Trading View indicators
  • Desktop and Mobile versions

It’s always best to have a diverse investment portfolio, and it’s equally essential that the tools you use to maximize your returns are thoroughly vetted and operate in your best interest.

Bitsgap also accepts all primary payment methods, and you can rest easy knowing that all of your personal information and investments are secure throughout the entire process.

Limit Order vs Stop Order FAQs

Why Hasn’t My Order Been Activated?

This is a reasonably common issue many novice traders run into and doesn’t have anything to do with the trading bots themselves.

It actually has to do with the parameters you set for your orders.

If you placed an order for a target price, but the asset never reaches that price, your order won’t ever be triggered.

This goes for any parameter you set for your trades, so it’s best to always perform your due diligence in combination with the trading strategies provided by the companies listed above.

Is It Safe To Use Trading Bots?

Navigating the crypto space comes with its fair share of risks and concerns, but the companies that created these trading bots have kept all of this in mind.

Moreover, they’ve put many security measures in place to ensure you and your assets are safe from the volatility of the crypto market.

I should also be mention that this is in conjunction with the parameters you set for the bot, and you should always research an investment before committing. 

How Do I Know Which Trading Bot Is Right For Me?

All that matters is what you hope to accomplish with your investments.

The crypto market is constantly changing, and particular outcomes require specific trading strategies to be successful.

If you want to put in daily effort into your investments, but you simply don’t have the time, find a bot that’ll automate all of the actions you can’t handle yourself.

As for the bots described in this article, Pionex is excellent for those not looking to make a hasty monthly financial commitment.

They also have a great community full of helpful information about the bot and its functions.

CoinRule aims to provide bot trading services for the novice all the way up to seasoned expert traders.

Their bots can handle a massive amount of volume, and they offer some of the fastest trading speeds.

Bitsgap is another excellent option, and they have one of the most financially-conscious business models.

They charge for a subscription, but it won’t break the bank, and they provide a long list of services to help you grow a healthy crypto portfolio.

Don’t hesitate to test out each bot to see which one you like best; it never hurts to take full advantage of a free trial.

If you decide to use a trading bot, remember that they don’t have to be in control 100% of the time.

Sure, they’re helpful on your off-hours, but if you’d rather take a hands-on approach, you can stop the bot’s actions at any time.

Having this tool at your disposal will not only help with the learning curves that come with cryptocurrency, but it’ll also allow you to get your investment journey on the right track with minimal time or risk invested.

To Conclude Limit Order vs Stop Order

Its hard to get your head round limit order vs stop order concepts.

You don’t have to dive into the crypto market alone, but it’s crucial that you build up your education on how the market works in addition to the common terminology used all throughout.

If you feel it’s a bit overwhelming, you can use the trading bots in this article to maximize your returns and make the most conscious trading decisions. 

Written by Thomas McGovern

I have over a decade of experience with blockchain and cryptography. I also hold a master’s degree in Mathematics.
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