Discussion about the great cryptocurrency order: Order limit vs. Market orders
Cryptocurrency, a digital currency using cryptography for safe financial transactions, has conquered the world in recent years. As the popularity increases, the number of investors trying to buy and sell cryptocurrencies. Two popular types of orders were used on the cryptocurrency markets: orders for the border and market orders. Although they may seem similar, there are significant differences between these two types of orders that can affect your investment strategy.
limit orders
The limit order is a specific price, after which the trader is ready to buy or sell currency. It’s like a “order book” on the cryptocurrency market. The limit order usually has the following features:
* Buy or sell : Type of transaction (buy or sell)
* Price : minimum and maximum prices that will be used to implement trade
* Quantity
: Number of trade units (e.g. $ 10,000 $ 100)
When a trader plays an order for a limit, they basically say: “I want to buy/.
market orders
Market order is a transaction or nothing that will be made immediately or not at all. It’s like the price of the “market”, which determines the price of cryptocurrency trade.
When a trader plays a market order, he basically says: “I want to buy/sell this currency for x $ per unit now.”
What’s better?
In general, limit orders are considered better than market orders when:
* You have a specific idea : You know exactly what you want to do with your money and you have a clear plan. The limit orders allow you to perform at an optimal price.
* You trade a lot of : If you replace thousands or tens of thousands of units, limit orders can help you achieve goals more efficiently.
However, market orders are better suitable for:
* Short -term trade : If you try to quickly achieve a quick profit or react to changing market conditions, a market order may be a road.
* High frequency trade : For those who trade in real time, market orders can help them respond faster to changing market prices.
Examples of a real world
To illustrate the difference between limit orders and market orders, let’s consider two examples:
- Example of limit order
Suppose you want to buy 10,000 bitcoins each $ 20,000 per unit. You will place an order of a limit with a broker to perform for 20,000 USD if the price reaches this level.
In this case, the broker will use his algorithms to find the optimal price for you and make trade after meeting the conditions. If the price drops below USD 19,999, the transaction will be canceled and you will not see any profit (because it will not be made).
- Example of a market order
Suppose you want to buy 10,000 bitcoins for $ 20,000 per unit immediately. You will place an order on the market with your broker.
In this case, the broker will trade as soon as he receives an order for a specific quantity and price, which in this example is $ 19,999 (because the price dropped to USD 19,999). Profit is calculated on the basis of the difference between the current price (USD 20,000) and the desired price (USD 19,999).
Application
To sum up, while both restrictions and market orders are necessary tools for traders in cryptocurrency markets, they have clear features that can affect your investment strategy. Orders for limits are better suitable for specific situations, such as trade in large volumes or having a clear plan, while market orders are ideal for short -term trade, high -frequency trade or responding to changing market conditions.
