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Basic Order Types and How to Use Them in Crypto Trading


If you want to buy or sell an asset, a cryptocurrency, you need to place an order on the exchange. 

CEX.IO allows you to trade with two order types — market and limit. 

In addition, CEX.IO Broker allows you to trade with two conditional order types — stop-limit and one-cancels-the-other (OCO).

Market order

A market order is buying or selling cryptocurrency immediately, whatever the available price is at that moment. For example, to “market” buy Bitcoin on the BTC/USD market, you need to choose the amount of quoted currency (USD) (i.e., “buy me enough bitcoins for $100 right this moment”). Likewise, selling with a market order means selecting the amount of base currency (BTC) to sell.

The market price for an order is calculated right from the top of the order book. As an example, you would like to sell 5 BTC with a market order. There are currently buy orders for 3 BTC at $50,000, and 4 BTC at $49,500 in the order books of the exchange. Your market order will fulfill the first buy order completely, giving you $150,000 for 3 BTC, and partially fulfills the second buy order with $99,000 for 2 BTC. In total, you receive $249,000 at an average price of $49,800 per BTC.

In highly liquid markets like BTC/USD, market orders are almost always executed instantly so it would not be possible for you to reverse your order.

Market taker

If you buy and sell cryptocurrency by market orders, this makes you a “market taker”, which means you “take” volume off the order book and remove liquidity from the market by fulfilling open orders on the exchange.

Limit Order

You need to use a limit order when you would like to buy cryptocurrency below the current market price or sell it above the market price.

The execution of this order type is not instantaneous. Since a limit order may not reflect the current price, your order will not execute until your requested price matches with that of a seller or a buyer. In return, you can always cancel your order until it is executed in full. 

Even if there is a buyer or seller at your order price, insufficient volume can prevent the order from being executed. In that case, the remainder of your order will remain open until a buyer or seller with the required volume can meet your order price. The remainder of the order may be canceled as well, returning the remainder to the user’s account balance.

The executed portion of the fiat or crypto involved in the limit order may not be reversed or returned.

Please note that each currency pair has a minimum amount required to place a Limit order. 

Market Maker

If you buy and sell cryptocurrency with limit orders, this makes you a “market maker,” which means you provide liquidity to the exchange and create an additional, incremental market for the coin or token. Your limit order adds volume to the order book.

Stop-limit order

Note: Stop-limit orders are available only in CEX.IO Broker. 

A stop-limit order triggers the execution of a Limit order, only if the price of the traded asset reaches or breaks through a specified price. That price is the “stop price,” which you need to dial in as you make your stop-limit order.

You need to enter two prices into a stop-limit order: the stop price and the limit price. 

Stop price

The stop price is the price that would activate the limit order and is based on the last trade price. 

Limit price

The limit price is your requested price to execute the limit order, once the stop price is triggered.

Just as with limit orders, there is no guarantee that a stop-limit order will result in full or partial execution.

When you submit a stop-limit order at CEX.IO Broker, it is directly sent to the CEX.IO exchange and placed on the spot order book. It remains there either until the stop triggers or expires or you cancel it.

When you give a stop-limit order at CEX.IO Broker, you additionally need to choose the expiry date for your order. There are two alternatives: good-till-cancel (GTC) or good-till-date (GTD). 

Good-till-Cancel (GTC)

Choose GTC if you want your order to remain active until you cancel it yourself. 

Good-till-Date (GTD)

Choose the GTD option if you want your stop-limit order to be effective until a specific date.

One-cancels-the-other

A one-cancels-the-other (OCO) order is a pair of conditional orders. When one of the two is executed, the other order is automatically cancelled. The most common OCO order pair is a stop order with a limit order. 

Choose an OCO order if you want to trade a break above resistance or below support.

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