Stop Market orders are used for buying or selling bitcoin when the Market Price move past a specified point, which ensures that you enter or exit at a predetermined price level. This could help you lock in profits or limit your losses.
When the price level crosses the stipulated entry or exit point, Stop Market orders become Market Orders and get executed accordingly.
1. Suppose 1 BTC currently costs $12,000 and a user believes that if the price goes past the $14,200 point, it will start a bull run, causing the price to soar. The user may then establish a Stop Market Buy order for X BTC at the price of $14,200. As a result, should the prevailing Market Price go above $14,200, the stop order will get executed as a Market Buy order.
2. Suppose 1 BTC currently costs $12,000 and a user believes that if the price goes below the $10,000 point, it will start a bear run, causing the price to drop significantly. They may establish a Stop Market Sell order for X BTC at $9999. As a result, should the prevailing Market Price go below $9999, the stop order will get executed as a Market Sell order.
One of our users, @swaaalla, has made a video demonstrating how to use the Stop Market order.
We hope you will find it useful.