Order types
Lesson 11 of 39 in the course “Crypto”. Free, with animations and a quiz.
An order is your request to buy or sell. A market order buys right now at the best price available. Plus: instant. Minus: you do not pick the exact price, and in a fast move you may fill a bit worse (that is called slippage).
Limit order: “I buy only if price drops to my level”. You place it below the current price and wait. Plus: you choose the price. Minus: price may never get there, and then there is no trade.
Price dropped to your level and the limit order filled, meaning the trade went through at your price. You bought cheaper than price was when you placed it. That is not profit yet: price can still go either way.
A buy stop order sits above the price. It triggers when price rises to the level and turns into a market order. Traders use it to enter on a breakout, when price pushes through an important level.
Stop-loss: an order that closes the trade at a loss if price goes against you. Take-profit: closes it in profit at your target. On the chart the target is 1.8 times farther than the stop (1:1.8). Set both the moment you enter.
Check yourself
- You want to buy right now at the current price. Which order?
Correct answer: Market. A market order fills instantly at the best available price. Limit and stop orders wait for price to reach a level. - You want to buy cheaper than now. Which order?
Correct answer: Limit. A limit order goes below the price and waits for your price. A buy stop sits above the price: it is for entering on a breakout. - Which order caps the loss on a trade?
Correct answer: Stop-loss. A stop-loss closes the trade at a price you chose in advance if the market goes against you. A take-profit does the opposite: it locks in profit.
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