Different types of orders on cryptocurrency Exchange
Cryptocurrency exchanges are like normal websites where you can buy, sell or exchange cryptocurrencies with other cryptocurrency or fiat currency like US dollars or British dollar. For those who want to trade and would like to use fancy trading tools, need to open an exchange account which requires KYC before buying, selling or trading. The different exchange has different features like user-friendliness, fees, security, payment methods, trading tools, etc. Most popular once are Binance, Coinbase, Kraken, Cex.io, Polonix, Gemini, etc.
In this blog, we are going to cover different trading tools used in crypto exchange.
1. Market Orders
A market order is the most basic order among all orders. In a market order, buy or sell a currency in exchange for another at the best available price in the current market. It is the fastest and most reliable way to enter or exit a trade. It reduces the liquidity of the market in a more faster way, so the fee for market orders are usually less than limit orders which we called taker fees in most of the cases(but not all).
2. Limit Orders
In a limit order, traders have more control over the price of buy or sell of a currency. In buy limit orders, a currency will only buy when the current market price reaches to set limit price or lower. If a trader wants to sell a currency on a limit price than that order will only execute when current market price equal to limit price or higher.
3. Stop Limit Orders
A stop-limit order is an order to put a regular sell or buy order when the highest bid or lowest ask price reaches to a specified price which we called stop price. This type of orders is helpful for securing gains or lessen the losses.
Once the stop price is hit, a regular limit order is placed. This limit order now works as usual and order is placed when the limit price is reached (for a buy order, the order is placed when the price hit to limit price or lower and for a sell order, the order is placed when the price hit to market price or higher).
Also, take a look at our cryptocurrency exchange development services.
Example:-
A user buys a stock X expecting its price increases in the future but it is also sure that it may fall. So to reduce the chances of losses, one can place a sell stop-limit order to lessen the losses. In stop-limit order, we have to set the “stop” price at which a limit order triggered and hit when the price reached to limit price or abo
Conclusion
In this blog, we learn about basic trading options available in most of the exchanges. In my next blog, you will learn about advanced trading options like trailing stop orders, leverage margin trading, etc in detail.