How to set a stop loss on Binance

How to set a stop loss on Binance

Signal

If you are looking to swing trade, one of the first concepts you will learn is about using a stop loss to limit your risk. Since this is an absolutely integral part of trading, the next question then becomes - how can I set one?

If you look at the Binance interface, the first thing you will realize is that there is no "stop loss" option. This is because exchanges operate based on individual buy and sell orders. A stop loss is a concept, not an actual order type.

Below I'm going to show you three different ways to get around this and set a stop loss on Binance. Let's get started.

1) Using Signal

The first way to set a stop loss is using a trading automation tool like Signal. Here's what setting a stop loss looks like.

  • Price – the price of your stop loss
  • Profit – the amount you will lose if your stop loss triggers
  • Amount – the amount you want to sell

That's it. You can also add buy orders, up to 5 take profits (targets), and a stop loss all at the same time. Plus enhanced functionality like using a trailing stop loss, receiving sms alerts, laddering into positions, and more.

Click here to try Signal

2) Using Binance Stop Limit

The second way to create a stop loss is to set up a Stop-limit Sell order.

I am going to assume that you are already in a position. For this example, let's assume you have a position of 10 ETH and are trading against USDT.

Go to the Sell side of the Stop-limit order type as shown below.

Stop Limit Sell Order on Binance
Stop Limit Sell Order on Binance

Perfect, now what do each of the fields mean?

  • Stop – the price you want your stop loss to trigger at
  • Limit – the price you want the order to be placed for
  • Amount – the amount to sell (for example 10 ETH)
  • Total – the total (Limit × Amount)

Let's look at an example

Say that ETH is trading for 200 USDT and you want to set your stop loss at 180 USDT. Your sell order might look something like this.

Sell Order on Binance
And this would be mostly right. Except that there is an important catch!

When the price hits 180 a Limit order for 180 will be placed.

The catch is that that Limit orders aren't always filled. They look to fill at the specified price or better. This means at 180 or better (180.1, 180.2, etc.). If the price is moving downwards quickly, your order might not fill.

Here is how this can happen:

  1. The price hits 180 briefly as it moves through the order books
  2. Your Limit order is placed for 180, but the price is already at 179.9
  3. Your order waits on the books for the price to come back up to 180
  4. If the price never returns to 180, your order will not fill

What can you do about this?

The solution is to use a lower limit price. For example, you can set the Limit price to be 150. It will then fill at 150 or better, which in this case would have been 179.9.

How to set a Stop loss and a Take Profit at the same time?

Creating a stop loss as a Stop-limit works, but what if you want to set a take profit at the same time?

For this, you need to use the OCO Sell order type.

Binance OCO

OCO typically stands for "order cancel order" or "one cancels the other". You can use it to overload your balance and place 2 sell orders at the same time.

OCO Sell Order on Binance
OCO Sell Order on Binance
  • Price – the price you want your take profit to trigger at
  • Stop – the price you want your stop loss to trigger at
  • Limit – the price you want your stop loss to be placed for
  • Amount – the amount to sell
  • Total – the total (Limit × Amount)

It's the same as before but also includes the price field for your take profit. After configuring this you will see two orders in your open orders. If one order fills then the other will be canceled. Note that there is still the same risk as above with the limit price, so make sure to set it lower than the trigger price.

Why is it so complicated?

The problem with creating stop losses using Stop-Limit sell orders and OCO Sell orders is that they have no intent. They are simply the raw mechanics to exchange one coin for another.

That's why we built Signal. By cutting out the unnecessary noise in trading, you can focus on the things that actually matter - your strategy. This leads to improved efficiency and overall performance.

I hope that you have found this guide useful. If you would like to learn more about Signal, check out our website.

You can also reach out to us any time and we'd be happy to help!