Understanding Order Types on Cryptocurrency Exchanges
Navigating cryptocurrency trading begins with mastering two fundamental order types: limit orders and market orders. This guide will walk you through their mechanics, use cases, and potential risks like partial fills and slippage.
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How Exchange Matching Works
Trading systems prioritize the most favorable prices for users - buying at the lowest available price and selling at the highest available price.
Consider this iPhone market analogy:
- Three sellers offer iPhones at ¥21,000, ¥22,000, and ¥25,000
- A buyer willing to pay ¥25,000 would automatically get matched with the ¥21,000 seller first
- Only after exhausting cheaper options would the system match with higher-priced orders
This price-time priority matching ensures optimal trade execution. Beginners should practice with small orders to gain confidence.
❗️Critical Reminder❗️
Always double-check order amounts and prices before submission, especially with market orders that execute immediately.
Limit Orders Explained
Users set fixed prices and quantities, with execution occurring only when market conditions match their specified parameters.
When to Use:
- When you want precise control over entry/exit prices
- For strategic entries at support/resistance levels
- When trading illiquid assets with wide spreads
Execution Flow:
- Set desired price and quantity
- Click "Buy/Sell"
Order either:
- Fully/partially fills if matched
- Remains in order book until matched or canceled
Practical Examples:
Limit Buy Order
- Current BTC price: ¥271,000
- User sets buy order: 2 BTC @ ¥270,000 (Total ¥540,000)
- Order fills when sell orders appear at/below ¥270,000
Limit Sell Order
- User sets sell order: 1 BTC @ ¥280,000
- Order fills when buy orders appear at/above ¥280,000
Partial Fills: What Happens?
Occurs when the order book only contains enough volume to fulfill part of your order at your specified price.
Example:
- Sell order: 2 BTC @ ¥246,964
- Order book only shows ¥246,964 buy orders for 1.1222 BTC
- Result: 1.1222 BTC fills immediately, remaining 0.8778 BTC stays in order book
Market Orders Demystified
Orders that execute immediately at current market prices, prioritizing speed over price precision.
When to Use:
- When immediate execution is more important than exact price
- For highly liquid assets with tight spreads
- During high volatility when quick entry/exit is needed
Execution Flow:
- Buy orders: Specify total spending amount
- Sell orders: Specify total selling quantity
- Instant execution across best available prices
Practical Examples:
Market Buy Order
- User wants to spend ¥250,000 buying BTC
- System fills order sequentially from lowest-priced sell orders
- Average fill price shown in order history
Market Sell Order
- User wants to sell 2 BTC immediately
- System fills sequentially from highest-priced buy orders
Slippage: The Hidden Risk
Price discrepancies that occur when market orders exhaust available liquidity at target prices.
Slippage Scenarios:
Market Sell Example:
- Selling 14 ETH might fill prices ranging from ¥20,000 to ¥1,000
- Results in much lower average price than expected
Market Buy Example:
- Buying ¥200,000 worth of ETH might fill from ¥21,498 to ¥50,000
- Results in much higher average price than expected
Pro Trading Tips on BitoPro
Quick Order Placement:
- Click any price in the order book to auto-fill order fields
- Buying? Click a sell order price (and vice versa)
Percentage Calculator:
- Use the 25%/50%/75%/100% buttons to allocate funds
- System calculates how much you can buy at specified prices
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FAQ Section
Q: Which order type has lower fees?
A: Limit orders often receive maker fee discounts, while market orders typically pay taker fees.
Q: How can I minimize slippage?
A: Check order book depth before trading, use limit orders in thin markets, and consider splitting large orders.
Q: Why did my limit order partially fill?
A: This occurs when the market only had sufficient liquidity at your price for part of your order size.
Q: When should I absolutely avoid market orders?
A: During extreme volatility or when trading low-liquidity tokens with wide spreads.
Q: How do I cancel an open limit order?
A: Navigate to your open orders panel and select "Cancel" for the specific order.
Final Thoughts
Mastering order types transforms your trading experience:
- Limit orders = Price precision
- Market orders = Execution certainty
- Always monitor for partial fills and slippage
For further assistance, contact BitoPro support:
- Phone: (02) 8666-8968
- Email: [email protected]