In simplistic terms, an order on a crypto exchange is an instrument to buy or sell an asset at the trader’s preferred price. As a result, the types of orders are different ways of ordering the purchase or sale of a particular asset. They are recorded in special blocks – stacks, which are usually located on the title page of the platform.

To perform a particular operation, a trader must specify several parameters, and on their basis and determine the types of orders on the crypto exchange:

• the asset that the trader has decided to buy or sell

• the size of the asset being bought or sold

• exchange currency for which the trader has decided to exchange the asset

• the preferred price per unit of the asset

• application type

The term of execution of the operation depends on the type of order, as well as the parameters specified by a particular trader. The execution of an operation can take either a few minutes or a few days. For example, a trader decides to sell one bitcoin for $50,000: if there is a buyer for this amount, the transaction will be concluded – however, the potential seller and buyer must be present for this to happen. It can happen that the conditions set out in the bid do not match market realities up to a certain point, and as a result, the execution of the transaction may be delayed. In this case the order continues to be in the stack. If the order is not executed for a long time, usually the trader cancels it and forms a new order with other parameters.

Everything is quite simple when a person follows the cryptocurrency rates online all the time and can make a transaction promptly, but everything becomes more complicated when he pays attention to the quotes only a few times a day and is not constantly at the terminal.He may then miss a sudden rate spike or a change in the market situation, for example, due to sudden news. Suppose it could be a decision by a major world economic power, such as the United States or China, to fully legalize bitcoin, which would inevitably lead to a spike in the exchange rate. In order to make a transaction at the right time, there are different types of orders.

Limit order

This application on the crypto exchange many traders call basic, so most often beginner investors start with it. Types of orders of this type involve not only specifying the amount of the asset to buy and sell, but also the desired purchase or sale price. Such an application on a crypto exchange is suitable for those who fear to miss a sharp jump in the rate of cryptocurrency. For example, investors may be waiting for an important news announcement that will inevitably lead to a change in the exchange rate, and then they send this type of application. In anticipation of an increase in the value of bitcoin, one can set a maximum price of $65,000 and sell the cryptocurrency at exactly that price as soon as and if it reaches the desired level.

Such an order on the crypto exchange has a disadvantage. Firstly, if the number of people willing to make a similar transaction is quite large, the market supply may not be enough to conclude a transaction directed within the limit order. In this case, the order will remain unexecuted. Secondly, the rate may change dramatically in a fairly short period of time, in which case bitcoin may rise to $75,000 and the order for $65,000 will remain unfulfilled. Finally, thirdly, if the trader specifies too high a price, for example, $85,000 per bitcoin, the transaction will also fail, because the cryptocurrency will simply not reach this level.

Similar dangers await the owners of limit orders when making deals to buy assets. For example, a trader expects the exchange rate to fall and sets a price of $40,000 per bitcoin. If the market rate does not fall to that level or there are not enough people in the market willing to sell their coins at that price, the transaction will fail again. Another danger is to set the limit above the market. For example, if bitcoin falls to $30,000 and you set your limit at $40,000, the rate will continue to fall, but your deal will be done. Therefore, it is recommended to set limits slightly above the market in case of buying and below the market in case of selling.

Market bid

The second most popular crypto exchange application is usually used by those who decide to sell an asset right now and at the current price. It is most often used by those who follow the changes in the exchange rate on their own and react to them literally online. Such applications on the crypto exchange allow you to conclude a transaction manually at the appropriate moment. They are used by those who decided to sell a certain asset and lock in a profit or buy a certain asset here and now.

A market order is usually executed within a few seconds, but not longer than a few minutes. In such an order, the seller or buyer simply specifies the amount of the asset to be bought or sold, and the exchange rate is applied as it is at the cryptocurrency exchange at that moment. In fact, these types of orders are used in any exchange.

Such bids on the crypto exchange have one significant disadvantage — the exchange rate may change dramatically, for example, due to an increase in those willing to make a transaction with the same asset or a sharp jump, and then the transaction may be concluded at an unfavorable price.

Such applications on the crypto exchange are used most often by experienced traders who can independently analyze and predict the future change in the exchange rate. For example, a trader expects that the bitcoin rate will change by $5,000 in the near future, but at the same time he is not ready to be cheap when making a deal and sell or buy the cryptocurrency before reaching the desired figure. In this case, he puts the maximum and minimum price in the order.

As a result, when the exchange rate changes to the level he needs, he can buy or sell the cryptocurrency at the price he needs. Conventionally, this principle can be described as follows: buy bitcoin at $40,000 and sell it at $65,000, but in reality, of course, this set corridor is much narrower.

The main risk of using such a bid is overconfidence of traders. One can remember how many people sold cryptocurrency at the beginning of December 2017 at $10,000, confident that bitcoin would not grow further, and ended up missing out on profits when BTC was already worth $20,000.