A Stop Market order is a conditional trade within a set time frame that combines the features of stop with those of a market order to buy or sell, regardless of the price.
A Stop Market order is usually used to immediately close positions when the prices moves too far up or down.
The Stop Market order will only be placed to market after a given stop price has been reached.
Once the stop price is reached, the stop market order becomes a market order to buy or sell at market price.
Trigger Price: A market order will be placed when the stop price level is reached.
Example of a Stop Market Order
For instance, you have 1 unit of BTC USDT of average buying price of 8,000 USDT, and the current price of BTC has went up to 10,000 USDT. In order to protect your profit, you can place a sell Stop Market order at 9,500 USDT.
Average Buying Price: 8,000 USDT
Current Market Price: 10,000 USDT
Unit: 1 BTC
Trigger Price: 9,500 USDT
A Market Order of selling 1 BTC will be placed into market once the price has falls beneath 9,500 USDT.
That way, if the price of BTC goes down to your specific trigger price, you are assured that your BTC will be completely sold at market price.