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<p>The first step to trading efficiency is the education on how to trade, and it starts by understanding order types.</p><p>‍</p><h2 id="header-0"><strong>Introduction</strong></h2><p>Whether  as a newbie or advanced trader, you’re probably familiar with the  different order types available in various crypto exchanges.   These  order types allow users to trade across varying markets and multiple  tools.  It is necessary that traders are familiar with the different  order types available in the market and to execute the most efficient  market transactions. In this guide, the order types are explained.</p><h2 id="header-1"><strong>Makers Vs. Takers</strong></h2><p>Before  exploring the different order types available in the market,  understanding Makers’ and Takers’ role is vital information needed by  market participants. Makers and Traders are both traders executing  orders through an exchange. They are respectively the liquidity  providers and the liquidity takers needed for an exchange to thrive.  Trade execution occurs when buy orders meet sell orders.</p><p><img src="https://academy-public.coinmarketcap.com/optimized-uploads/4d50af201e0f4b19850c6afb9a51d143.jpeg" /></p><p><strong><a href="https://www.investopedia.com/terms/m/marketmaker.asp" rel="noopener noreferrer nofollow">Makers</a></strong> make the trade; they set up-sell or buy orders entered into the order  book and bring liquidity to the exchange. For example, a trader is  willing to sell his 10 BTC at the value of $55,000; he sets up an open  order for willing Takers to take on the trade. Maker orders are  typically not executed immediately; their orders make up part of the  order book where trade inventories are entered.</p><p><strong><a href="https://cryptocurrencyfacts.com/maker-vs-taker-cryptocurrency/" rel="noopener noreferrer nofollow">Takers</a></strong>,  on the other hand, take off liquidity from the exchange. They execute  market buy or sell orders by taking on Makers open trades. If you’ve  purchased or sold at market price, then you’ve functioned as a taker of  already available orders. Typically takers will utilize limit order to  provide depth to a specific market.</p><p>Makers have the most rewards  because they bring in the liquidity needed for an exchange to thrive.  Although big trading firms often act as market makers or liquidity  providers for an exchange, smaller or individual traders also take on  that role. Despite the reward, one is not without the other as both  traders would need the various order types to execute their trades.</p><h2 id="header-2"><strong>Limit Orders</strong></h2><p>Trader  A believes an asset will increase in value in the nearest future and  does not want to execute his trades at the current market level. He  ideally sets a sell order at a price in the future. Trade B believes the  price of an asset is way too much at the current market price,  expecting a correction, he immediately sets up a buy order at a price he  believes the asset will drop to in the future. Both Trader A and B  explored the Limit Buy and Sell Order, which allows traders to set up an  expected entry or exit that is not currently present in the market.  Both trades are set up against the future price increase or correction  of the asset. Traders who use these trade orders are called<strong> Makers</strong>.</p><p><img src="https://academy-public.coinmarketcap.com/optimized-uploads/42154c2bdfb144519d0417f6be0d574e.jpeg" /></p><h2 id="header-3"><strong>Market Order</strong></h2><p>This  order type is instantaneous. Traders who do not want to take on too  much time for their orders to be filled make use of the market order  type. For instance, Trader A believes the worth of an asset is dirt  cheap at the current market price (CMP), and price discovery is on its  way, which will blow up the price of the asset. Trader B holding an  asset and believes a crash is inevitable; using a market order the  trader could immediately exit his position using the tool. Both traders  are known as <strong>Takers</strong>.</p><p>Limit and Market Order are  the two most common Order types in most exchanges. However, as the  market continues to grow more Order type gets introduced.</p><h2 id="header-4"><strong>Stop-loss Order</strong></h2><p><img src="https://academy-public.coinmarketcap.com/optimized-uploads/7d1f3a23a2e6444cbf1372c9768aa11f.png" /></p><p>For  most traders, this order type is a necessry aspect of their daily  trading experience. As the name specifies, a stop-loss order closes a  losing trade when the price is triggered. The stop-loss order is set  below the current price level and is not entered into the order book.  Trades get stopped out when a percentage price loss is triggered  automatically using Market Order.</p><h2 id="header-5"><strong>Stop-Limit Order</strong></h2><p>Stop-limit  is a modified aspect of the stop-loss order using the limit function.  Traders get the option of setting a stop and a limit price, i.e., when  your trade set up hits your stop limit, the market immediately sets up a  sell limit that takes you off the trade. For instance, your stop price  is around $50,000, and the limit price at $51,000. When the price  reaches your stop entry at $50,000, a limit order is set up for you at  $51,000 to close the trade. The risk associated with this order type is  that the price limit might not be realized again due to the high price  impact. Therefore, it is advised to set your Stop-limit orders close to  each other to take care of market volatility.</p><h2 id="header-6"><strong>One-cancels-the-order (OCO)</strong></h2><p>OCO  combines the best of both worlds of selling at a target price and  setting stop-limit at a given price range. With OCO, traders ensure  profit-taking at any point of their preferred targets and protection  when the trade takes a different turn. Either win or loss, when one  order type is executed, the other order is canceled. For instance, a  trader sets his exit at $55,000, his Stop-limit order at $50,000 and  $51,000, respectively, when the trade gets to $55,000, it automatically  close the orders at $50,000 and $51,000.</p><h2 id="header-7"><strong>Good Till Cancel (GTC)</strong></h2><p>GTC  is an instruction for a trade to stay open until it is canceled or  executed. This is the present state for the cryptocurrency market since  it’s a 24/7 market versus the stock market’s daily close and the forex  market’s weekly close.</p><h2 id="header-8"><strong>Take Profit Limit Order</strong></h2><p><img src="https://academy-public.coinmarketcap.com/optimized-uploads/f116af2953be462aa57a63db77ceb1ba.png" /></p><p>Trades  set up these limit orders to sell or buy when the price reaches a  profit target. When triggered, the order executes the trade in profit.  This resembles the OCO order type; the difference is that it offers no  stop-limit protection but only profit-taking abilities.</p><h2 id="header-9"><strong>Trigger Entry</strong></h2><p>Allows  you to enter a position using a trigger mode. For trigger entry order  price, the trigger price represents the price that, if reached, will  trigger your order and submit a market order. For trigger entry, you  have to provide a trigger price and a limit order.</p><h2 id="header-10"><strong>Fill or Kill</strong></h2><p>Say  a trader is looking at buying 10 BTC worth around $40,000. A fill or  kill order either fills the entire 10 BTC order at that price, not  partial, or it doesn’t execute at all if the price makes a rebound.</p><h2 id="header-11"><strong>Immediate or cancel (IOC)</strong></h2><p>IOC  is the milder approach to the Fill or Kill order type. With Immediate  or Cancel orders, the order can be partially filled. For example, if an  order to purchase the earlier 10 BTC is not filled, the amount of BTC  that can be loaded is taken, the rest is canceled. Say only 5 BTC is  filled, the remaining order is closed to stop any further buying or  selling.</p><h2 id="header-12"><strong>In closing</strong></h2><p><img src="https://academy-public.coinmarketcap.com/optimized-uploads/02d74f170ac14e36a20ef6bc81bae467.png" /></p><p>The  first step to trading efficiency is the education on how to trade, and  it starts by understanding order types. It comes with a high  recommendation that an intending trader first learns the market types  and the order types before taking on trades. Learning early before  earning has been the mantra for ages, and trade is an industry that  quickly exposes individuals without the skills, knowledge, or expertise.  Before taking your first trade, ensure you understand the concepts as  losses are common with trading ventures. But, with the right knowledge  and education, losses are reduced significantly, and profit becomes a  consistent experience.</p><p></p><p>Visit <a href="https://www.bsc.news/" rel="noopener noreferrer nofollow">bsc.news</a> for more informative content</p>

Trading Toolkits: Order Types Explained

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