Order - Order Types
At BaseFEX, we offer many different types of orders to help you trade cryptocurrency derivatives. You can check the order types here, and also check the Fees of your orders.
Market orders will be executed immediately with the current market price. You might use this kind of order when you want to execute it right away. You should pay close attention to your order book when choosing your order type, as a large market order might cause huge costs.
Limit orders are used to specify the maximum or minimum price you are willing to buy or sell at. You can use this order type to minimize your trading cost, but your order might not be able to be executed when its price is too far from the market price.
Limit Order Example
Quantity = 10 Contracts Limit Price = 100 Direction = Buy
A bid of 10 contracts will be placed in the market with a Limit Price of 100.
Trigger orders are executed with pre-defined Trigger Condition and Trigger Price by a customer. Trigger Conditions include Mark Price, Market Price, and Index Price. Once the price reaches the pre-defined Trigger Price, the system will send your order to the market, be it Market Order or Limit Order.
Limit vs. Market Order
Trigger Order Example
Trigger Condition = Index Price Trigger Price = 10,000 Limit vs Market Order = Market Quantity = 10 Direction = Buy
A market order of 10 contracts will be bought when Index Price reaches 10,000.
Stop Loss / Take Profit (SL/TP)
A Stop Loss (SL) is designed to limit an investor’s loss on a position. It does not enter the order book until the market price moves against your position and reaches a certain Trigger Price. Traders use this type of order as a risk-management tool to limit losses on existing positions.
A Take Profit (TP) is somewhat similar to a Stop Loss order. However instead of executing when the price moves against the position, the order executes when the price moves in a favorable direction and reaches a certain Trigger Price.
BaseFEX's TP/SL feature is not a new order type. Instead, it allows you to set TP/SL conditions for your current position, after you enter the position via Market, Limit, or Trigger Order.