How to use the limit orders to obtain better results of the cryptocurrency negotiation
Cryptocurrencies have been a topic of discussion in recent years, with many new investors and merchants entering the market every day. Although they can be profitable opportunities, cryptocurrency trade is provided with its own series of risks and challenges. A common mistake made by beginners do not use effective types of orders, including limit orders. A limit order allows you to buy or sell a particular cryptocurrency at a specific price, but it is essential to understand when and how to use them in the context of cryptocurrency trade.
What are the limit orders?
An order of limit is an order to make a specific price for a particular activity (in this case, cryptocurrencies). It is not an absolutely or anything; If you make more orders with different prices, the system will correspond to the highest offer or question. This approach allows merchants to exploit price fluctuations by minimizing potential losses.
How to use orders limit to cryptocurrency trade
To use limit orders effectively in the cryptocurrency trade, follow these steps:
1. Identify your market goals
Before making a limit order, define your market goals. Are you looking for specific cryptocurrencies (for example, Bitcoin), activity activities (for example, BTC/USDT) or periods of time (for example, intradic)? Knowing your goal will help you identify the right entry and exit points.
2. Establish its price
Determine the price you want to insert or get out of an operation using your limit order. For example, if you are looking for a specific cryptocurrency and believes that its price will increase by $ 0.10 within the next time, establish your limit order to buy BTC/USDT at $ 1.00.
3. Choose the order type
There are different types of limit orders available:
* Market order: This is the most elementary type of limit order and allows operators to work at any price.
* Limit the order: As mentioned, this type of order requires a specific price for execution. You can choose between various types, such as:
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Well until deleting (GTC): The trade will remain active until the order is canceled or closed manually.
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Immediate or cancel (IOC): Trade will be done immediately if combined by an existing limit order. If no correspondence is detected, the order will be canceled after a specified period of time (for example, 1 minute).
* Arrest order: This type of order helps protect your position in case the market moves against you.
4. Insert your order
After establishing the limit order, insert through the negotiation or exchange platform. It may be necessary to specify more details, such as:
* Time in force (TIF): The moment in which trade must be done (for example, GMT).
* Quantity: The number of units you want to buy or sell.
* Symbol:
The cryptocurrency and the class of activities associated with its limit order.
5. Monitor and regular
After inserting the limit order, monitor its execution and regular if necessary:
- If the market moves against you and the order is combined at a lower price, cancel the IOC (GTC) or modify it to have a lower typh.
- If the market moves in its favor and the order is made at a higher price than expected, take into account the addition of multiple units to the position.
Advantages of the use of limit orders
Limited orders offer several advantages for cryptocurrency merchants:
* Flexibility: Allow to exploit price fluctuations minimizing potential losses.
* Risk management: When establishing a specific price threshold, limited orders help operators to administer the risk and avoid significant losses.
* Efficient trade: Limit orders can be used together with other types of orders (for example, arrest orders) to create an efficient negotiation strategy.
Conclusion
The effective use of limit orders is essential for successful cryptocurrency trade.