There are multiple order types available on Liquid. In this help article we walk you through them.
There are four main order types you'll see in the order form on Liquid:
A limit order is an order will be executed when it is matched with an order of the same price on the opposite side.
For example: If the price of Bitcoin is 10,000 USD and you place a Limit order to buy at 9,900 USD, your order won't be executed until the price of Bitcoin reaches 9,900 USD. You'll be able to see your order in the order book, where it will stay until your price hits or you cancel the order.
With a Limit order, you're confirming the specific price at which you want to buy or sell an asset.
When you make your order, you also need to enter the Quantity, which is how much of the asset you want to buy or sell.
Note, that your order may be filled immediately if the price you place a buy order at is a price equal to or higher than the lowest ask, or a sell order at equal to or lower than the highest bid. However, it may be only partially filled if the quantity you are buying or selling is larger than the current bids or asks. In addition, your order may not be filled for some time, or even at all, if you place an order far above or below the current market price.
A Market order is an order that will be executed immediately and in full by buying or selling from the bids and asks in the order book. With a Market order, you choose the quantity of the asset you want to buy or sell and then once confirmed, you will buy or sell that quantity from the bids or asks available. This is the simplest type of order as it means you don't need to specify a price.
For example: If you want to buy 1 Bitcoin, you can select Market order, enter your quantity as 1 and confirm your order. You'll then buy 1 Bitcoin from the market.
What is a Stop order?
A Stop order is a Market order to be executed when the market price hits a certain amount. This is particularly useful if you want to protect an investment and limit your losses. Stop orders are used when you want to "stop" your loss from getting too high.
For example: you want to sell 1 BTC but don't have time to monitor the market. Market price at the time is 10,000 USD.
The solution: Set a Stop order to sell your Bitcoin at 9,950 USD to protect your trade if the price moves against you. When the price hits 9,950 USD, the Stop order will be executed as a Market order and you'll sell your Bitcoin.
For more advanced trading, stop orders are used by traders to take advantage of price breaks and price momentum in a given direction, allowing traders to buy if the price is moving up or sell if price is moving down.
What is a Trailing Stop order?
A Trailing Stop order is a Stop order with a limit that "trails" after the market price by a distance set in currency or as a percentage. This means that your Stop order will move up or down with the market price at a specified distance. These are normally used by traders to lock in profits of an existing position once the position's P&L has moved into positive territory.
For example: If you bought 10 Bitcoin at 10,000 USD and the price has now moved to 10,500, you will profit with 5,000 USD. To lock in profits at 10,400 USD or 400 USD profit per BTC, you place a Stop sell at 10,400 USD for 10 BTC. But what if the price keeps going up?
The Solution: Set your Stop to move accordingly giving you the ability to lock in a higher profit. This can be done manually, or by using Trailing Stop order. In this case, setting up a sell Trailing Stop with a distance of 100 USD would allow your stop to move with the price at a distance of 100 USD, maximizing profits, even if the market turns against you.
In a buy Trailing Stop order, the limit is set at a fixed amount above the market ask by a set distance. When the market ask falls, the limit will also fall ("trailing" after the market ask) by the distance amount. When the market price rises, the limit doesn't change and the order will be executed as a market order when the limit is hit.
In a sell Trailing Stop order, the limit is set at a fixed number below the market bid by a set distance. When market bid rises, the limit will also rise ("trailing" after the market bid) by the trail amount. When the market bid falls, the limit does not change and the order will executed as a market order when the limit is hit.
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