Market, Limit and Stop orders: Cryptocurrencies trading

Written by CHANEL G.

Order types, in other words are plans you can make to trade. Orders let you plan your currency purchases and sales without having to follow the market. For example, you can program that Bitcoins will be sold when they reach a certain price.

1. Market Order

Market orders are placed instantly and executed based upon the current currency value determined by the market. The system will use the price a user has set to buy or sell coins.

In other words , this order type requires that you specify the quantity purchased but not the amount to be paid, as the market price at the moment.

2. Limit Order

Limit orders let the user specify the price and the quantity they wish to trade. When the currency exchange rate is at the specified amount, your order (buy or sell) will be executed. The system will trade automatically if the market value exceeds what you set when you placed your order.

It works as follows:

If Bitcoin is worth R $40, you can place a Limit Order for R $30 to buy it when it reaches R30. The system will execute the order if Bitcoin’s price drops below R $ 40 or R$ 30. The order is not executed, but it remains in an Order Book, waiting for market movements.

3. Stop ordering

The Limit order and the Stop order are very similar. The Limit order takes into consideration the exact price at which you wish to sell or buy. The Stop however considers price transition as long it does not exceed a specific amount. If the Stop price is exceeded, the Stop will execute the order at market price.

This is a practical example of the difference between Limit and Stop.

  • Let’s assume that Bitcoin is worth $40
  • You have placed a Limit Order for $ 35.50. This amount will be added into the Order Book. You can lower the price to make it affordable to everyone who is interested.
  • You have already placed an order. Do not place another order. R 35.50 will be removed from the Order Book. Your buy order will be executed at the market rate, with the price being reduced to R$ 35.50. After downloading, the next amount will be charged at R$ 35.50.

Let’s explain it in another way.

Stop of sale: This is used to manage your losses. You will have to sell a coin whose price drops below a certain value. You simply need to enter the amount you want to use as a trigger. This price must not exceed the current currency exchange rate. If the market reaches this price, your coins will be immediately sold.

This price

Buy-Stop: This allows you to choose to only purchase these currencies if they rise in the market. Simply enter the amount you want to use and the price. This price must be higher than the current currency price. If the market hits that price, your coins will be bought immediately.