New Types Of Orders On TabTrader – What Are They For?
Last week TabTrader added support for new types of orders on the HitBTC, Poloniex and Kraken exchanges. Today we'll tell you about the difference between these order types.
We'll start off with this one because it's the main one that was available on previous versions of the app. By placing it, you provide the maximum price at which you're willing to buy (or the minimal price at which you're willing to sell) some asset. Use a limit order if you have at least a vague idea of what the best price would be for you in the near future.
For example, let's say you've decided to buy 1 Ether for $600 when its market price is $700. As soon as the price drops to $600, the limit order will come into effect. Sometimes the deal can go through even lower, in which case you might get 1 Ether for $598 or even less. This is what's known as 'slippage.'
Be careful: when purchasing, the price should be lower than the market price, but when buying it should be higher.
This order means that you're ready to buy or sell cryptocurrency here and now at the current market price. In other words, you could buy or sell the 1 Ether from the previous example for $700.
This is essentially the same as a limit or market order only that it works on a delay. It comes into effect when certain conditions are met; for instance, when the price reaches a level set by you. In other words, you build a more complex chain of interactions with the order book. On TabTrader, stop orders are only available for the HitBTC exchange.
To give an example, let's say Ether is actively going up and you want to sell it. But how can you make sure that you won't sell yourself short? Who knows what the maximum price will be? That's where stop-limit orders come in: you can set one to sell your cryptocurrency only when the price suddenly drops. Yes, you'll miss the peak, but you'll be able to preserve most of your funds.
To put it simply, this kind of order allows you to smoothly navigate the exchange rate's twists and turns. The most widespread way of using stop orders is by selling assets, or 'closing a position', as traders say.