Coinbase recently announced the integration of ‘Stop Order’ function which allows its users to trade bitcoin in a convenient fashion without having to deal with drastic price fluctuations.
What Is a Stop Order and Why Is It Important?
To begin with, a stop order is a feature that allows users to buy or sell any asset on a trading platform when the target asset’s value reaches a particular price point of choice. Stop orders are also known as stop-loss orders.
The securities watchdog and enforcement agency in the United States – Securities Exchange Commission defines stop-loss order or stop order as an order to either buy or sell a stock once that particular stock’s price reaches a specified price. The price at which the trade will be executed is known as stop price.
The Stop Order feature converts the predefined stop order into market order once the stock’s (asset) price in the market equals the predefined stop price. Once the stop order is converted to market order allowing the asset’s sale or purchase.
There are two types of stop order – buy stop order and sell stop order. Buy stop order is used to buy a particular asset at a desired price. Similarly, sell stop order is