5 Different Types of Orders Used In Cryptocurrency Trading

Cryptocurrency trading is a popular way to make money, from both an investment and a purely speculative standpoint. It's important to keep in mind that trading crypto is not the same as buying it. Crypto trading involves exchanging it for other assets as well as trading pairs such as Solana USDT and more, with the intent of earning more than you originally paid for it by selling it back at a higher price.

Anyone can do crypto trading, but since it involves complex strategies and often very high-risk situations, many people are better off leaving the serious trading to professionals.

Here are the basic order types used in cryptocurrency trading and their definitions.

Market Order

A market order is an order to buy or sell at the best available price. It can be easily placed by entering the amount you want to buy or sell and selecting either "Buy" or "Sell." It guarantees that your order will be filled, but it doesn't guarantee how much your transaction will cost you. This is the simplest option and it's the default one in most crypto trading bots.

Many beginners use market orders because they are simple and quick, but there is a risk that you will end up paying more than you want to if the market moves between when you place your order and when it is filled. If there is a heavy volume on either side of your desired price point, your transaction might take a while to process, especially if you place your order during peak trading hours.

Also, some exchanges charge higher commissions for market orders compared to other types of transactions, so it's important to keep this in mind when choosing what type of transaction to use.

Limit Order

A limit order is an order to buy or sell at a specific price point. When you're placing a trade on an exchange, you have the option of choosing between a "market" order and a "limit" order. A cryptocurrency market order is one where you are immediately buying or selling at the current market rate, while a limit order is one where you specify the price that you want to buy or sell at. With a limited order, the transaction will only take place if the price moves in your favor.

The most important thing to keep in mind when using a limit order is that it won't necessarily be filled at your price point. The price may move up or down and may never reach your desired level. If this happens, what's called a "trigger" occurs and the transaction takes place.

This is why people often say that crypto trading has so much volatility—more than any other currency exchange in the world. There's no guarantee of how far (or not!) the price will go before your trigger occurs!

Stop Order

A stop order is an order to buy or sell a stock once the price surpasses a certain "trigger" price. You can place a buy-stop order above the current market price of a security, which means it will only trigger if the stock goes up in price.

Or you can place a sell-stop order below the current market price of the security, which means it will only trigger if the stock goes down in price. Let's say you're worried that bitcoin prices are going to fall after you buy them, so you use a sell-stop order to limit your losses.

You can set it at $2,500, for example. If bitcoin falls below $2,500 and hits your set sell price, then your sell order gets triggered and you sell your bitcoin at market value.

Stop Limit Order

A stop-limit order is an order to buy or sell a cryptocurrency once it reaches a specific price. The order includes two components: the trigger price and the execution price. A stop-limit order will be executed once the trigger price is reached; however, unlike a regular limit order, it will only be executed if the market price rises above or drops below the trigger price.

Stop-limit orders are one of the most useful and powerful trading tools available, allowing you to specify both a stop price and an order to execute (or not) once that stop price is reached. These orders allow you to trade based on price movements without having to constantly watch the market.

Trailing Stop Order

Trailing stop orders are one of the most popular order types used in crypto trading, but they are also one of the most misunderstood. In this post, we will discuss what a trailing stop order is, how it works and when to use it.

Trailing stop orders are a type of ‘stop-loss’ order that can be used for both buying and selling; however, the focus of this post will be on buying. A trailing stop is placed a certain number of points away from your entry point. The ‘trailing’ refers to the fact that the trigger price moves along with the market price.

This means if you buy Bitcoin at $8,000 and place a trailing stop sell order at $7,700, your sell order will only be triggered once the price falls below $7,700 (and not $8,000). Let’s go over some benefits and disadvantages of this order type.