Stop-limit order

A stop-limit order has two prices. The stop price is the trigger: while the market has not reached it, nothing is placed on the book. Once the last traded price touches it, the exchange submits a limit order at the second price, the limit, which caps the worst price the trader is willing to accept.

Traders use it to cut losses or to enter breakouts without paying any price the market happens to offer. A stop-market order works the same way but converts into a market order, so it is almost certain to fill but can suffer heavy slippage in a fast move. Crypto trades around the clock with frequent wicks and thin books on smaller pairs, so the choice between the two matters.

The main risk is a gap: if the price jumps past both the stop and the limit, the order sits unfilled while the position keeps losing. Setting the limit a little beyond the stop leaves room for the fill, at the cost of a worse average price.