In cryptocurrency trading, mastering different types of order mechanisms is crucial for risk management. For many traders, the most important tool is the stop order—especially the market stop order and the limit stop order. So, what is a market stop order? How does it differ from a limit stop order? When should you use each one? This article will analyze these two order types in depth to help you make more informed trading decisions.
How a Market Stop Order Works
A market stop order is a conditional order that combines a trigger mechanism with market execution. Simply put, this type of order waits for the asset price to reach your set stop price. When this price is reached, the order is immediately activated and executed at the current best available market price.
The key point is the immediacy of execution. When the asset price hits the trigger point, the system no longer waits but instead executes at the best available market price. In spot trading