Trading cryptocurrencies have become the most popular and profitable activity among traders in the trading world. Whenever you trade in crypto sphere, you have to interact with the market by placing different order types. Generally, these orders are the basic instructions to buy or sell cryptocurrencies like Bitcoin, Ethereum, etc. in a defined rate range. Whether you are a seasoned pro or new to the crypto trading world, having the right strategy and right tools to manage risks, and execute trades is quite important.
Common Order Types
The best crypto trading terminals offer a wide range of trading tools to traders. Understanding these types can play an immensely valuable role in your trading strategy, and ensuring you are getting the most out of your trades. Let's have a look at some popular types:
- Market Order -This is a simple order to trade at the prevailing market rate.
- Limit order-This type only executes at a price which you have selected. Traders can use this order type to buy at a lower rate or sell at a higher price than the current market price. A limit order provides you with more control and protection.
- Stop Order -This is an order that automatically places a market order after the current rate of the asset moves past your selected trigger price. Using a sell stop order will be of great help to automatically sell your assets if the market falls past a pre-specified level, and thus, protecting your position from further rate falls.
Advanced Order Types
Apart from these orders, there are some advanced types which traders can use to manage risks. These orders give you additional control over the execution. Let's have a look at some of them:
1. Stop Limit Order -This order type combines the benefit of limit orders with those of the stop orders. Traders use this type to execute precise limit orders once a specified price limit has been reached.
- A sell stop limit order is used to place a sell limit order once a trigger price has been reached just like a stop order. This type prevents additional losses if the rate of the coin falls.
- On the other side, a buy stop limit order is used to place a buy limit order once your desired trigger price is reached. It's most beneficial if you believe that once a certain price threshold is reached, the rate is likely to continue moving higher, and you want to benefit from this momentum.
2. Take Profit order -This is a special type of order which traders can use to close the trade. This type makes the trading results more profitable. This is a standing order which is used to sell a crypto asset once it reaches the preset price. Selling at this level ensures that the trader will earn a profit on his trade. The take profit strategies are quite popular among those traders who prefer short-term trades. This closes the open position for profit once it reaches the predetermined value/price. Generally, T/P is a value which the trader chooses as the appropriate amount in case the trade moves in the favor of a trader. If that particular level of profit is reached, or once the T/P order is triggered, the trade will be closed automatically. It's a kind of pending order that locks in the trader's profit automatically and lets them earn immediate profits. If you need any kind of information on this article related topic click here: crypto to crypto exchange