When you’re trading on XREX, you interact with the market by placing orders, and there are currently three different order options for you to choose from.
Non-conditional orders: Market
Conditional orders: Limit, Stop Limit
~ Non-conditional orders: Market
Market order is the instruction to trade a digital asset instantly at the ongoing rate in the market. Market orders are usually carried out to execute a specific trade immediately. Once the order is placed, it goes to the top of the order book and it will be executed at the current market price. One note here is that when placing an order, it’s important to know that cryptocurrency market prices can change within seconds which would mean that the order could be executed at a slightly different rate than anticipated.
~ Conditional orders: Limit, Stop-Limit
Limit order is the instruction to trade a cryptocurrency at a predetermined price. In limit orders, you have the freedom to specify the price at which you’d like the trade to be executed. If you have specified the price at which you’d like to trade your crypto, your order will go into the order book and it will be automatically executed when the price of the cryptocurrency matches the prices that you quoted on your limit order. Note that there is no guarantee that the limit order you have placed will be executed and if the price of the cryptocurrency does not match your pre-specified price, the trade will not be completed.
➤ Buy/Sell limit order condition:
* If the limit price = market price → execute limit order
- For example, whether you want to sell or buy crypto using limit orders, the process in one and the same. Simply set a limit price and await for the order to execute once the market price matches that of your order. You bought BTC worth $22,000 and now want to sell BTC once it reaches a high price point. You place a limit order with a limit price of $35,000, then a week later, to your delight, the market price has gone up and your sell limit order goes through!
Stop Limit order
Stop limit order combines a stop price and a limit order, wherein a stop price acts as a trigger to place a limit order.
Stop price: a trigger price to buy or sell
Limit price: an order placed to buy or sell a when the price is reached
In a stop limit order, you can predetermine a stop price which subsequently places a limit order once the market price reaches the stop price entered in the trade. That is, once the desired stop price has been reached, a stop-limit order becomes a limit order that will be executed at a specified limit price.
Stop-limit orders are often used by traders to mitigate risk, lock in profits, and limit downside losses by specifying the highest or lowest price they are willing to accept.
➤ Sell stop limit order condition:
* If the stop price ≤ market price → place a limit order
- For example, the price of BTC is now at $20,000. You bought BTC when it was $18,000. Your analysis tells you that once BTC dips to $19,000, it will enter a bearish trajectory and probably trend downward. You want to sell the BTC you bought at $18,500. Even though the price is higher now, you do not want to place an order until you are confirmed of the trend because you might miss out on potential upside should the price bounce back higher.
- You then place a stop-limit order for when BTC reaches $19,000 (your stop price or trigger price) and a limit price of $18,500 (your limit order or sell price). The order might be filled with a price of $18,500 or higher; or if the trend downward happens too quickly, the order might not be filled completely.
➤ Buy stop limit order condition:
* If the stop price ≥ market price → place a limit order
- For example, the price of BTC is now at $20,000. Your analysis tells you that once BTC crosses $22,000, it will enter a bullish trajectory and probably trend upward. You would then want to buy BTC at $22,500. Even though the price is lower now, you do not want to place an order until you are confirmed of the trend.
- You then place a stop-limit order for when BTC reaches $22,000 (your stop price or trigger price) with a limit price of $22,500 (your limit order or buy price). The order might be filled with a price of $22,500 or lower; or if the trend upward happens too quickly, the order might not be filled completely.
Once an order has been established, it will be displayed in Open order / History with the type of Buy or Sell.
Should you have any further questions regarding trading on XREX and/or how you interact with the market by placing different types of orders, feel free to drop us a message and a XREX specialist will get in touch.