To trade cryptocurrencies effectively, any trader needs to understand different types of orders such as market orders, limit orders, and stop-limit orders. Let's learn about the concepts and how to place orders through the following article!
Market order
What is a market order?
A market order is an automatic buy or sell order. A market order is executed immediately at the current market price. The price here is the exchange rate of a cryptocurrency pair. When you place a market order, the transaction price will be determined according to the current exchange rate available on the order books.
When a market order is matched, it will continuously buy or sell coins until the order is executed for the quantity that the customer has entered. For example, if we choose to buy 1 Bitcoin on the BTC/USDT trading pair, the market order will continuously buy Bitcoin at the best available exchange rate until it buys enough 1 Bitcoin. How to place a market order on CoinSavi
Step 1. Log in to your CoinSavi account.
Step 2. At the bottom of the app screen, click on the "Trade" tab, which will display a list of coins available for trading.
Step 3. On the trading screen, select the trading pair, for example, BTC/USDT or ETH/BUSD, depending on the currency you are trading.
Step 4. Select Buy or Sell direction and select the order type (limit, market or stop limit) you want to execute.
Step 5. Enter the amount of coin you want to buy or sell or press “+”, “-” to adjust the amount.
Step 6. Click the "Buy" or "Sell" button to place an order.
Step 7. After placing an order, you can go to the "Open Orders" tab to see the status of your transaction.
Step 8. Once your trade has been executed, you can find it in the "Order History" tab or in the "Trade History" tab to review your trade details.
Limit Order
What is a limit order?
A limit order is a type of buy or sell order that specifies a maximum or minimum price at which a trader is willing to buy or sell an asset. And the trade is only executed if the market hits that price. If the price does not reach the specified limit price, the limit order will not be executed. Limit orders give traders more control over their trading strategy and reduce the impact of unexpected price movements.
How to Use Limit Orders
While market orders are executed immediately, limit orders are executed at a predetermined price, which is usually better than the current market price. For example, if a trader wants to buy coin X but has a limit of $100, they will only buy that coin at a price of $100 or less. If a trader wants to sell coin Y with a limit of $200, the trader will not sell any coins until the price is $200 or higher.
Limit orders allow traders to set price limits that they set. As a result, they will not be forced to constantly monitor the market to execute trades at the price they want. This will control their risk.
How to place a limit order on CoinSavi
The way to place a limit order is similar to placing a market order. However, with a limit order, you will need to enter the price at which you want the order to be executed.
III. Stop-limit order
A stop-limit order combines the benefits of a limit order with the benefits of a stop order. This type of order is used to execute limit orders exactly after the market meets a specific price.
What is a stop-limit order?
A stop-limit order consists of two prices, the stop price and the limit price. The stop price is simply the price set to trigger a limit order. The limit price is the specific price at which the stop-limit order is triggered. This means that when the market price reaches the stop price, your limit order will be pushed to the order book immediately.
Although the stop price and limit price can be the same, this is not a requirement. In fact, it is safer for you to set the stop price (trigger price) slightly higher than the limit price (for sell orders). Or slightly lower than the limit price (for buy orders). This increases the likelihood that your limit order will be filled after the stop price is triggered.
How to Use a Stop Limit Order
A stop limit order requires three main pieces of information to execute. These include the stop price, the limit price, and the volume.
Once the order is opened with the exchange, it will buy or sell the specified amount at the limit price after the market reaches the requested stop price.
Let's say you currently own 1 BTC at a current price of $29,500. However, you believe that the price may drop. In this case, you can set a stop limit order to avoid excessive losses. To do this, you set the stop price to $29,450. The limit price is $29,400. And the volume is 1 BTC.
This order will then be triggered when the price of BTC drops to $29,450. The exchange will continue to sell your BTC until the BTC price reaches $29,400 and then stop. Similar to selling Bitcoin when the price drops, we can also set a stop limit to buy Bitcoin when the price increases.