Digitization has brought a lot of advantages for traders where they can execute transactions on their own without relying on any third party for market-intel. However, before you venture out and start trading on your own, a few key insights about some of the common traits of typical digital currency exchange in India can help you trade like professionals. One such trait is managing orders while trading on any cryptocurrency exchange. Let us deep dive to know how different trade orders function and how you can take advantage of it while trading.
A market order is a trade type where the order executes immediately based on the market fluctuations. However, it is not necessarily executed at the price on which it was quoted. To explain this, you can say that “X” has listed 1 BTC for sale at US$10,000. But the trade executes at anywhere close to US$9500. In a market order, the advantage is that the trades are executed immediately as soon as the orders are filled on the order-book.
However, one might question that always buyers will be interested to buy at the lowest price, likewise, sellers want to sell it at the highest bid, so how can trade always execute? The answer lies due to increased volatility and competition in the market owing to high volume trading. Every trader will be interested to fill in their quotes and execute it at the earliest to avoid excessive competition letting the digital asset wait at the exchange for long. As a result of this trait, the market orders are generally executed very close to the bid-ask price for cryptocurrencies and all other assets on the exchange. On a regular trading day, the market orders are heavily influenced by the demand and supply of specific cryptocurrencies like ETH, Bitcoin, DAI, Monero on the exchange.
A limit order or also known as the pending order is done by specifying a threshold limit at which the trade will be executed. If the prices do not fall in between that window, the trades are not executed. In this order-type, there are specific restrictions placed on the pricing and the orders never execute until and unless they are fulfilled at the price quoted for buy & sell. As a result of these traits, these limit orders are not executed immediately.
How do Limit Orders Work?
A limit order can only work on the principles of “ buying at a price lower than the quote, or selling at a price higher than the quote” Say, for example, if a trader has quoted that he/she wants to sell Bitcoin at US$10,000, it will not be sold for even $9,999.99 buy-order. It can only be executed when the buy order has reached US$10,000 or higher. The only thing is that the digital assets might have to stay that way for some time till it is purchased or sold on the exchange. While placing the limit order, the trader must fix the prices keeping the market sentiments close to the bid-ask price.
How Can You Take Advantage from Limit Order?
While trading in cryptocurrencies or planning to invest in bitcoin business in India, you can use the limit order feature on the exchange to prevent any price for sale and purchase at the exchange for your digital currencies. As a result of the limit order, the markets do not go for “flash crashes” and it enhances stability at the market.
Stop Order Limit
A stop order limit is a threshold limit that the traders (buyers & sellers) decide to ensure that the currencies that they have listed become a market order. If the digital assets do not reach out to the level as listed by the trader, they lay in the order book and never execute.
What is the Advantage of Stop Order Limit?
A stop order price is very essential for traders who are pitching in for the bitcoin business in India to trade their cryptocurrencies mitigating exponential volatility both positively and negatively. With the stop order limit varying in classifications like stop-loss order and stop limit, market volatility can always be kept in check to mitigate significant fluctuations.
Trading in India works best when you are guided by experts who help you understand the market well and take action accordingly. PCEX Member empowers digital currency exchange where anyone can register as a master franchise, franchise, or freelancer to trade in cryptocurrencies. Investing in cryptocurrencies is subject to market risk, however; and professionals guiding you in your investment journey can help make things much more feasible and profitable for you always.