You have just uploaded the Binance or Luno application and suddenly you see the words ‘market order’, ‘limit order’, and ‘stop limit order’.
Alamak! How to do this? Don't panic, let's read we explanation first!
Market Order
This option can be said to be an instant purchase or sale. Meaning, you make a purchase or sale of Bitcoin (BTC) or any crypto token directly at the nearest price offered by the market.
The purchase price will take the lowest price offered in the sale price list either immediately or in the order book list (usually labeled red in the exchanger).
The selling price will take the highest price offered in the purchase price list either in the current demand or in the order book list (usually labeled green in the exchanger).
For example, the price of Bitcoin at the time of writing is $ 57,250 and you want to buy it right away. Whereas according to the analysis, the price can drop lower and you may be able to buy it at a lower price, but you continue to buy it without waiting first.
Limit Order
This option opens up space for you to buy or sell at a certain price. This way you can
optimize your profits. At the same time, you have time to examine the movement of the price of one token that reaches the desired level.
For example, the current price of Theta Fuel (TFUEL) is $ 0.36 and you set the buy order limit at $ 0.20. The option is automatically made when TFUEL hits $ 0.20 without you having to see token price movement 24/7. The same applies for the purpose of selling tokens.
Stop Limit Order
Also known as ‘good‘ til canceled ’(GTC). This option involves two prices:
First - stop price: it will convert the order to buy or sell
Second - limit price: the maximum price that investors are willing to buy or the minimum price that investors are willing to sell.
For example, you place an order to sell 1 XRP at a price of $ 1 (limit price) in the order book if the XRP price reaches $ 2 (stop price). So if the price bounces back from $ 2 to $ 1, your XRP token will automatically be sold at $ 1 as set.
This method is more friendly for investors who do not want to be exposed to high volatility risk.
One Cancels the Other (OCO) Order
Special for Binance users because this option is not available on Luno.
This option allows you to place two orders at the same time. It combines limit orders with stop limit orders but only one of them will be processed.
Meaning if one order is fulfilled, automatically the other order will be canceled. However, if you accidentally cancel one of the orders, then the other orders will also be canceled.
In conclusion, the options provided on the exchange platform are intended for you to take smarter and more thorough actions. Make sure to DYOR before you start investing .
