The cryptocurrency trade is becoming the new trading medium. More and more individuals are showing interest and learning about it. This article will focus on the limit order, one of the kinds of trading available on trading exchange platforms. It will include the description of the limit order and all the relevant knowledge a person should have to trade in cryptocurrency.
It is essential to know about the limit order. Every exchange includes a form of trading called ‘limit order’. In simple words, limit order offers traders a facility to buy and sell at a particular price. It helps improve the trade margins, and if applied appropriately, it can prevent significant losses.
The limit order consists of conditions set by the trader. When executing a buying trade, the trader will feed in a price value for the cryptocurrency. When the cryptocurrency drops at the fed value, the exchange will automatically buy the cryptocurrency in the volume set by the trader.
Similarly, during the sell trade, the trader feeds in a value for cryptocurrency. When the market hits that value or higher, it automatically executes a sell trade.
Limit orders can benefit traders who want to buy cryptocurrency at lower prices using the Bitcoin Freedom or other crypto platforms and hold it until the market goes up. The downside is if the market turns around and the trend changes, reaching the value is not possible to execute the trade. Hence a missed opportunity.
Expiration of Limit Order
There is an option for validation of trade in every trade portal. It enables a trader to set a timer to execute a trade. It offers flexibility to facilitate a trader to trade safely. However, the limit order option offers trade execution in the absence of a trader by the parameters set by a trader. The cryptocurrency market is very volatile. Therefore, time expiration offers a safe passage of time to execute a trade or cancel it.
The working principle of the expiration of limit order is simple. It offers three options usually. The first option offers the trader to continue with limit order parameters until the trader himself cancels the order. It is usually set as the default option in cryptocurrency exchanges.
The second option offers the trader to run the limit order parameters for a limited time set by the trader. And the third option goes automatically; if the value of the limit order is achieved in a short period, it will execute; else, it will cancel the order.
Steps for Execution of Limit Order
To execute a limit order trade, here is a quick step-by-step guide:
- Open your cryptocurrency exchange portal or application.
- Select a cryptocurrency pair to trade.
- Choose the Buy or Sell option as per your trade status. And select ‘Limit’ as the order type.
- Select the lot size.
- Input Limit order price value. For buying input, a lower value and for selling input, a higher value.
- Select expiration options.
- Go through the selected options and confirm the order.
Limit orders offer a number of benefits. Some of the advantages that we have identified include the following:
- The biggest advantage that limit orders offered to the traders is that they let traders sell and acquire cryptos at the value they desire.
- It enables the user to perform trials in order to check the elements regarding the required level.
- It gives traders complete access to the execution of orders, which means traders can have complete control over how they want to order and what they want to order.
- Limit orders are beneficial to traders trading several cryptocurrencies at a time or in high volumes.
- Additionally, limit orders prevent traders from manually monitoring the market. For instance, once a trader sells or purchases a cryptocurrency, the limit orders help him or her track the crypto until the order execution is completed. So, traders are totally free from keeping an eye on their orders as limit orders do so on their behalf.
The limit order trading option facilitates easy trade offered by every cryptocurrency exchange. The cryptocurrency market is volatile due to various aspects, which is an unreliable trading medium. To attract more trader options like Limit order offers safe trade options in this market.