New features: Stop orders and trailing stop orders

Dear Bitstamp clients,

To make trading bitcoins easier we added two new types of orders. Stop order and trailing stop order. These two order types can help you have better control of your trades.

What is Stop Order and how to use it?

An order to buy or sell bitcoins when its price surpasses a particular point, thus ensuring a greater probability of achieving a predetermined entry or exit price, limiting the investor's loss or locking in his or her profit. Once the price surpasses the predefined entry/exit point, the stop order becomes a market order.

For example. Let’s say you have 10 bitcoins that you have bought at price $400. Now, the current price of bitcoin is $480. Good trade, right?

You currently have profit of $80 per one coin. Let’s say you are going on a trip with your family and will not have access to the internet to check the price of bitcoin. While you are away price of bitcoin could swing up or down and you might miss the good opportunity or end up with loss.

To protect your profits you can set Stop Order at $450. By doing that you can be sure that if price goes below $450, your bitcoins will be automatically sold.

What is Trailing Stop Order and how to use it?

The trailing stop is more flexible than a fixed stop loss, since it automatically tracks the bitcoin’s price direction and does not have to be manually reset like the fixed stop loss.

For example: Market price of bitcoin is $480 and you placed a Stop Sell Order at $450, which is in our case $30 below the current market price. Suppose price of bitcoins suddenly increases to $550. You are now in chance of “locking in” even bigger profit by manually repositioning your Stop Sell Order to higher price.

Repositioning your Stop Order can be done automatically for you by enabling “Trailing Stop” function. In our case Trailing Stop Order will automatically reposition active Stop Order if price of bitcoin increases while maintaining spread of $30 between the bitcoins spot price and Stop Order.

To open a Trailing Stop Order, tick the box “trailing stop” when placing a Stop Order.

Important to know!

Stop orders are not a 100% guarantee of getting the desired entry/exit points. This is also known as slippage. Slippage can occur when volatility, perhaps due to news events, makes an order at a specific price impossible to execute and close the trade. In this scenario stop order will execute the trade at the next best price.

Best regards,
Bitstamp team