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FAQs
What is a stop-loss in DeFi? ›
How to Use Stop Loss in DeFi. As a form of stop loss, DeFi users on decentralized platforms such as 1inch can set a limit price to swap tokens to stablecoins. For example, if a user is holding Ether (ETH) and intends to sell the token if it hits a certain price, he can set a limit order at a specified price.
What is a stop order? ›What is a stop order, and how is it used? A stop order is an order to buy or sell a stock at the market price once the stock has traded at or through a specified price (the "stop price"). If the stock reaches the stop price, the order becomes a market order and is filled at the next available market price.
How does a stop limit order work? ›A stop-limit order provides greater control to investors by determining the maximum or minimum prices for each order. When the price of the stock achieves the set stop price, a limit order is triggered, instructing the market maker to buy or sell the stock at the limit price.
What is a stop-loss? ›A stop-loss order is a risk-management tool that automatically sells a security once it reaches a certain price (either a percentage or a dollar amount below the current market price). It is designed to limit losses in case the security's price drops below that price level.
What happens when you set a stop-loss? ›A stop-loss order is a buy/sell order placed to limit losses when there is a concern that prices may move against the trade. For instance, if a stock is purchased at ₹100 and the loss is to be limited at ₹95, an order can be placed to sell the stock as soon as its price reaches ₹95.
How do you use a stop-loss strategy? ›For example, if the stock is bought at Rs. 100 and the stop-loss order value is set to 10% (Rs. 90), in such a case when the price reaches Rs. 90 and is about to go lower, the stop-loss order is executed, and the trade is closed at Rs.