Any person outside of the trading world will say that it's just a game of buying and selling coins at particular times. But once you dive into the world of trading you realize how hard it is to predict and implement your buying and selling processes. Even if you might have the trading strategy, one thing is sure you cannot assure that this trading setup will be valid tomorrow because of the high volatility of the crypto market. But apart from trading strategies, even if you know where to buy and where to sell, you should not be waiting & watching the market for the price to reach your target price, and even sometimes opening and closing positions at very particular times, levels, and in a particular manner becomes crucial for correct implementation of the trading strategy, especially your trading strategy involves frequent buying and selling. For that purpose, various kinds of order types are introduced in the trading world which ensures that the orders get filled at a particular price and in a predetermined manner. So here in this article, we will look into some of the basic and potent order types that will make your trader's life easy and more profitable!

Market Orders

This is the most basic order type, market order means that the trader is ready to buy or sell any particular asset at the price provided by the market. Because of the simplicity and user-friendliness of market orders, this is what is mostly preferred by new traders who are just starting their trading journey.

Apart from the simplicity and user-friendliness, market orders do not provide any additional functionality to the trader and also have a drawback as the market determines the price, hence market orders are generally not preferred by experienced traders.

Limit Orders

These are the most preferred and popular order types in both traditional as well as crypto trading. In the case of Limit orders, the user provides the input to the price that he/she wishes to buy/sell the asset and once the price level of that asset reaches that level, the orders will automatically get filled. Limit Orders provide considerable automation for the traders which I suppose is very important in trading.

The drawback of the Limit orders is if the price level provided by the user never reaches that level then that order will be open forever. So it is important to provide well-researched and realistic input on where you want to buy/sell the asset so that the order gets filled.

Stop Orders

These are the orders practiced by almost every experienced trader, as these orders are mostly used to take ensure that losses are controlled. You might have heard about the order type called, 'Stop-loss (SL)', this is one of the measures taken by traders to control their losses.

It is advised by each and every trader to use stop loss as well as take profits, as no one can guarantee the next move of the market, especially in the case of the crypto market. So for that reason, it is very important to learn and understand the Stop Orders.

OCO Orders

OCO stands for 'One Cancels the Other', it is a combination of two types of orders, Limit & Stop Orders that we have already discussed earlier. Even though we can place two different orders on the same asset only those can get executed and once one of the two orders gets executed another gets canceled. This is a little complex but a very useful type of order, as you can have 'take profit' and 'stop loss orders' at the same time.

Let's understand this by a simple example, Amit bought 1 BCH at $105 and he thinks that BCH can go to $115 in the next couple of days but he also wants to minimize the losses so he doesn't want to hold that BCH if the price goes below $98. In that case, Amit can place an OCO order which involves the combination of two orders which are as follows -

• take profit if BCH surged to $115

• stop-loss if BCH dropped to $98

Now the two scenarios are -

Case 1: If BCH surged to the price of $115 then the 'take profit', and his 1 BCH will be sold at $115. This execution of the 'take profit' order will cancel the 'stop loss orders' as there will not be any BCH to sell at $98.

Case 2: Now instead of rising, the price of BCH dropped below $98, in that case, the 'stop loss order' will get triggered and 1 BCH will be sold at $98. This execution will cancel the 'take profit order'.

IOC

IOC stands for 'Immediate or Cancel', which clearly suggests that this is an order type that has to be executed at the market price immediately. IOC is completely opposite to the Limit Orders, as execution has to be immediate and at market price.

IOC is generally preferred by high-frequency traders, which is mostly carried out by algorithmic traders where immediate execution plays a critical role in implementing trading strategy.

This is all about trading orders, hope you have got a basic understanding of these order types and you can implement these order types in your trading strategies.

Hope you found this article informative, if yes then do follow me and share this with your friends who are getting started with trading.

Thanks For Your Time!