Explained: Trading Order Types

When it comes to cryptocurrency, the trading order types refer to conditional instructions embedded in order requests. It elucidates when and how the crypto orders should be implemented. By establishing conditions to sell or buy, emotions are separated from the process allowing an objective approach to crypto trading. Here’s all you need to know about five common trading order types.

Limit Orders

This order enables you to ascertain the minimum and maximum process at which you’ll sell or buy. If the demand and supply of the crypto coin are insufficient for your order so that it’s matched with an existing order right away, the limit order will be placed in the order book. It’s recommended that you use limited orders to control the price at which you can match the order.

Please note that the limit price should be more or less than 15% of the market price. In case it exceeds 15%, the trading engine will reject the limit order.

Market Orders

You can either sell or buy this order at the best price available. That’s why a market order is called an immediate or cancel order. You must use market orders with care because the price can be unfavorable for you.

Don’t match your order with a price that’s 1% below or above the best bid. It means that the order may only be filled partially. The unfilled section of the order will be canceled to ensure that there aren’t any orders remaining in the book.  

Stop Loss Limit Orders

This order allows a person to limit their losses via an open position. It requires a holder to provide two prices—limit price and stop price. A limit price denotes the lowest price at which the order is matched. A stop price indicates the market price that can trigger the posting or limit order.

As a holder, you have an option of getting an order trigger from mark price, last trade price, and index price. A stop-loss limit order can’t be used to add or open a position.

Here’s how you can check post-trigger activation:

• When it comes to placing this order, the margin isn’t required. However, a margin check will be conducted during the order trigger. In case of insufficient margins during the triggering process, the trading engine will reject the order.

• The limit price should be in a 10% circle of the marked price. In case the price exceeds this limit, the trade engine will reject the limit order.

Take Profit Limit Orders

This order type enables you to outline a target profit rate to close an open position. For that, you’ll have to offer two prices – the limit price and the trigger price. The limit price is the most unfavorable price that your order can be matched at. The trigger price is the price limit. If reached, it can trigger the profit order and add your limit order to the order book.

As a holder, you have the option of getting an order trigger from mark price, last trade price, and index price.

Here’s how you can check post-trigger activation:

• You don’t need a margin when you’re placing a take-profit limit order. However, the trading engine conducts a margin check. If there’s insufficient margin when the order is triggered, it’ll be rejected by the trading engine.

• The limit price should be a 10% limit of the market price. In case it exceeds the 10% limit, the trading engine will reject the limit order.

Bracket Orders

This order enables you to place three orders simultaneously – two trigger orders for stop loss and take profit, and one order for opening a long or short position.

The trigger orders (one take profit and one-stop loss) will have prices that are below or above the position’s entry points. They’ll be dependent on the position’s direction.

The stop-loss order may either be a stop-loss market order or a stop-loss limit order. Furthermore, the take profit can either be a take profit market order or a take profit limit order.

These trigger orders are categorized as reduce-only, giving you an option of an order trigger from the last mark price, trade price, or index price.

Please note the following:

• A bracket order isn’t a One-Cancels-the-Other (OCO) order. For instance, if a person triggers an order and gets placed, then another trigger order will stay active until the trader cancels it.

• Trigger orders are independent of original orders and can be canceled or edited at any time.

About the Author

The writer of this post is a part of the research team and a regular contributor to Urban Crypto. He writes extensively about making money with Bitcoin. You can check out the site for crypto news and industry info that brings you all the latest news and updates so you can successfully trade and earn from crypto. Check out their Ledger Crypto Starter Pack to get going.

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