How to place orders: Market, Limit and Stop Loss

By KarateCombatHub | Kucoin | 13 Dec 2021


Placing Orders: In this article i’ll talk through the 2 basic orders and the all important stop loss, which can secure your profit even whilst you’re sleeping! Definition sources: SEC.gov, Investopedia  

Market Order

A market order is a buy or sell order to be executed immediately at the current market prices. As long as there are willing sellers and buyers, market orders are filled. Market orders are used when certainty of execution is a priority over the price of execution. A market order is the simplest of the order types. - What does this mean? You want to buy/sell a token at the current price.  

Limit Order

A limit order is an order to buy or sell a token at a specific price or better. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher. A limit order is not guaranteed to execute. - What does this mean? You set a price you want to buy/sell for, and if the token's value hits this it will execute the order.  

Stop Loss aka Stop Limit/Market

The stop-limit or stop-market order will be executed at a specified price, or better, after a given stop price has been reached. Once the stop price is reached, a stop-limit order becomes a limit order to buy or sell at the limit price or better. Alternatively a stop-market order will become a market order and will execute at the current market price. - What does this mean? If a token's price is shooting up, and you think it is about to drop back down but are unsure whether to sell yet in case it keeps going up, you can set a stop loss to lock in your profit and protect it if the price plummets. For example if a token is worth 0.88 BTC, and you set your stop price to 0.85, and the limit price to 0.84. This means that when the value drops below 0.85 the limit order becomes live and will try to sell it all for 0.84 or above, securing your profits against any big drops whilst you are AFK or even asleep! If the tokens value doesn't drop and keeps going up from 0.88, the order won't become live and your token's value will continue going up. If your stop loss does get triggered, you could then rebuy the token at a lower price when the market has stabilised, and if it then rises back up can result in really good profits! A stop loss is such a useful order because it only executes if the price drops and you can secure your profit to sell at just below the peak of a spike. The danger is if it drops, triggers your sell order and the shoots back up you miss out. But that’s all part of your judgement! It’s also important to set your limit price a good margin below your stop price, the lower it is, the more chance of your order executing in case of a very sudden drop! - You can do the same with buying tokens and setting the stop prices just above the price you think is lowest, if it keeps on going down you don’t buy yet and get them even cheaper later!

One final note is that the box on the market trading page titled “Amount <token name>” seen below is how much of your total current assets you want to put into that trade. You can enter a specific number or select 25%, 50%, 75% or 100% of your current holdings. You can find similar order boxes on all major exchanges.

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If you are new to trading I recommend using Kucoin, which you can register for here. I like using Kucoin because it is simple to use, offers a great range of tokens and has great features like showing you the daily biggest gainers and losers. They also offer great opportunities to earn free crypto and trial funds by holding frequent giveaways, airdrops and competitions.

I hope you found this article useful and you can now go out and start your trading journey! If you liked it please leave a tip below! Happy trading and good luck! 

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