Many concepts are present along with Crypto trading the dual assets online. And for the investors who are into this field for some time now, will know that there are several ways to get Cryptocurrency.
The limit orders are a kind of order about the Crypto trading that helps the investors to acquire or sell a particular Crypto at a definite price or even higher prices. To sell at this price, you require to fix a higher or smallest price at which you are ready to sell or get an online asset. After setting this price, you can place your order in the book and it will execute only if the general price matches the limit rate or gets higher. Limit orders can give you more power as an investor to control the execution rates. And, these are automatic mechanisms so that you do not have to worry throughout the day about having to miss the getting or selling of the digital currencies.
The exchange you are utilizing for this aspect decides how long you can place a limit order. But it does not have an assurance that your rates will take place because the real price may never reach that limited price.
Functioning of Limit Orders
As an investor, when you submit a particular limit order, it gets placed in your order book instantly. But it will remain empty unless the rate of the coin touches your limit rates. The orders will take place according to the liquidity of the market. When there are different sell orders before you, the system is set to carry out their orders first. And then, there lie the chances of fulfilling your limited orders.
Also, you should keep in mind the expiry date of the order, as in general cases they last for 90 days. You should remember to check your limit orders on a regular period so that you can know the market situation very well.
Limit Orders Against Stop-Loss
There are several kinds of orders you can wield as an investor while dealing with Crypto, like limit orders, stop-loss orders, etc. In the case of the stop-loss orders, they will transform themselves into market orders and will carry them out at the new rate in the market. But, if the rate of stop does not reach the same, you cannot place orders.
Both limit and stop-loss are different in functioning as with limit orders, it will perform at the price set by you. But, in the case of stop-loss orders, they commit at the recent rates of the market.
Limit Orders Versus Stop-Limits
The stop-limits have the details of both limit and stop-loss at the same time. By the time it reaches the peak, it will enforce the limit order by default. If you are having a hard time maintaining the portfolio or do not get enough time to do that, you can use these stop limits to minimize the number of losses that you can face in the trades.
When you set these stop limits, you will have to specify two prices:
- Stop price
- Limit rate
There is a thin line of difference between these two, as stop pricing will help in placing a limit if they reach the top rate. But you can place the limit rate with an instant in your order books.
Appropriate Time to Use the Limit Orders
As an investor of Cryptocurrency, you can make use of these limits in situations:
- In conditions where you need to sell the assets at a higher rate than the market prices or acquire the assets at fewer rates than the ongoing rates.
- You have the patience to sell or acquire the assets.
- You wish to gain more profits and face fewer losses.
- When you like to divide the orders into several parts of limits.
With the help of limits, you can get much higher profits and also face fewer losses. But you should remember that if your limit rate reaches, it may not fill your order book all the time. And it may be half full at times depending on the liquidity and market situations.