For all crypto traders and investors, no matter how much experience they bring to the market, it’s crucial to get familiar with the basic types of crypto trading orders.
After signing up on a well-known crypto trading platform like C-Trade, you must be wondering what all the different buttons and options do. Therefore, this article is here to help you understand the various types of trading orders that you can use to buy and sell crypto assets.
Types of Crypto Orders
Many different types of crypto trading orders exist in the industry. Here are some of the most common and useful ones out there:
A market order refers to buying and selling crypto assets at the market price. The market price is supposed to be the best price available for an asset at the time of the order. As price changes, the fee and the total are estimated rather than the true values. You’re not able to place restrictions on a market order’s execution.
A limit order to buy refers to the lower price or limit that a crypto trader has chosen to buy. In comparison, a limit order to sell is the higher price or limit that a trader has decided to buy. A certain amount of funds is stored in your account when you execute a limit order. They are shown in the order book and do not necessarily guarantee that the order will be executed.
This type of order refers to limit orders made at a specific price. After reaching the stop price, it turns into a limit order. Stop limit orders require both a stop and limit price to be specified. They do not reserve your funds and don’t show up in order books before activation.
An IOC (Immediate-Or-Cancel) order executes at the price and quantity available, and the remaining of the order is canceled and doesn’t enter the book. If the quantity available is 0 at the specified price level, then the order will be canceled and rejected immediately.
A one-cancels-the-other (OCO) order is a complex tool that gives you the ability to combine two conditional orders. The moment one is triggered, the other gets canceled.
For example, if we take ETH at $1000, you could use an OCO order to either buy ETH when the price reached $900 or to sell it when the price rises to $1100. Since one of the two will be executed first, the second one gets canceled automatically.
Stop Loss Market Orders
Stop-loss orders help you instruct your trading platform or broker to sell a crypto asset if its price falls under a certain amount, which can assist in guarding against unforeseen losses. There are two types of stop-loss marker orders:
Trailing Stop Order
This type of order is a modified version of a regular stop order. Here, you set the trailing amount in the form of a percentage of how much you could bear to lose. It sets the stop price of selling at an amount fixed below the market price with an attached trailing amount.
As the crypto asset price rises in the market, the stop price rises by the trailing amount accordingly, but when the asset price falls, then the stop-loss price doesn’t change. Rather, the order turns back into the market order once the stop price is reached. These orders help you lock profits when a trade becomes favorable.
Stop Loss Limit Orders
This crypto order allows you to limit your losses with an open position. In a stop loss limit order, you have to provide a stop price and a limit price, where the stop price represents the market price when reached will trigger your limit order to be posted, and the limit price represents the worst price that your order can be matched with.
Your crypto trading platform will automatically sell your asset when its price reaches the specified level. When your stop or trigger price is reached, the system automatically converts the order to a sell but only at the limit price specified by you.
This order gives you the ability to avoid losses if prices drop suddenly, triggering a stop loss that causes quick recovery.
This type of order is placed only when it is allowed to enter the order book. If you submit a Post-Only order that is higher than the last price (which would cross the book), then it will be canceled. This order is especially useful when you only want to pay the maker fees.
Which Crypto Order Should You Place?
Conquering the types of crypto orders is essential to good and safe trading. Whether you decide to use stop orders to limit the amount of potential loss or OCO orders to anticipate different outcomes simultaneously, being thoughtful and knowledgeable about trading tools that are available at your disposal is vital.
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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. C-Trade, its affiliates, agents, directors, officers, or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same