The conditional instructions contained in the order request are referred to as the order sort. It describes how and when crypto instructions must be carried out. Setting up conditions to buy or sell removes some of the emotion from the process, allowing for a more rational approach to trading.
Market, Limit, and Stop Orders
Market Order - a form of Buy and Sell order that is executed at current market rates immediately.
Limit Order – When the asset hits a minimum price indicated in the order, a form of Buy and Sell order is executed at future market prices.
Stop Order - a form of Buy and Sell order that is executed at the exact price listed.
For example, a seller might have put a $700 per unit sale limit order for Bitcoin cash. In other words, the order is only meant to be fulfilled if the market price of Bitcoin cash is at least $700.
The market order will be aligned with the limit order if another trader places a market order to buy Bitcoin cash at market price ($700 per unit).
All limit orders issued by traders are stored in a crypto order book. The transaction will be cancelled or executed as soon as the conditions stated in an order form are met.
Forms of crypto orders
These four strategies represent some of the most basic order types:
- Buy market order
- Sell market order
- Buy limit order
- Sell limit order
These orders allow you to buy/sell crypto-assets immediately or when the price crosses a certain threshold. The crypto sector, on the other hand, does not always travel in four directions.
Traders must have more influence over when and how trades are carried out. As a result, you should think about the following advanced crypto order forms.
Stop-loss Order
Stop-loss orders are used to limit the amount of money that can be lost during a trade. This order type allows you to put an off-book request on the trading platform to sell an asset when it hits a certain price. Since the guidance isn't in the order book, the trading platform will have to keep an eye out for the price and place a market order.
Stop-limit Order
Stop-limit orders protect against market loss by triggering a limit order when the price hits a predetermined stop price.
The trading platform will activate the limit order when the asset hits the stop price. The trading platform can now monitor whether the asset's price returns to the predetermined level. If this occurs, your investments will be sold by the trading site.
Once-cancels-the-other Order
You can combine two order instructions in this form of order. The first instruction, for example, could buy an asset if its value falls below a certain threshold. Similarly, if an asset's value rises to a certain level, the second instruction could sell it. This order form is used by traders to automate their trading process.
Scale Order
Multiple limit orders to sell or buy the crypto-asset make up this order category. Traders use this order form to mitigate the market effect of large orders. More importantly, traders can profit from price increases by placing limit orders at regular intervals. Limit orders will be set at declining rates with a buy scale order. A sell scale order, on the other hand, would restrict orders at increasing rates.
Time-in-force Order
Order types do not have time-in-force instructions. It's a set of tools for modifying a limit order under time constraints. Within this domain, there are a few order types that help traders automate trading:
Immediate Or Cancel Order (IOC), for example, can cancel portions of orders that cannot be executed right away.
Good ‘Til Canceled (GTC), on the other hand, keeps the order open until it is executed or canceled by the trader.
Meanwhile, Fill-Or-Kill (FOK) cancels the whole order if it can't be completed immediately.
Conclusion
Understanding the various order types and strategically using them will help you prevent business losses. More importantly, you can make significant profits if you can build a series of orders and instructions based on market data.