Most exchanges offer the basic market and limit order types, and many offer stop market/limit orders, but very view offer all of those plus more! Bullex supports market, limit, stop market, stop limit, trailing stop market, trailing stop limit, fill-or-kill, immediate-or-cancel (IOC), and Reserve order types.
Market order types are one of the most common and simplest order types that exist. As demonstrated in the trading widget section, you are only required to enter one value: the amount of the asset you want to buy or sell.
Market orders are very quick and simple, but one concept that anyone who places a market order should be aware of is slippage. Slippage is a term that is used to describe prices changes induced by a market order.
For example, let’s say the last trade was completed at a price of 150 EURB per ether, and the order book has a sell bid for 1 ether at 150 EURB and 2 ether at 152 EURB. Then if you place a market order for 2 ether, you will purchase 2 ether for a total of 302 EURB (1 for 150 EURB and 1 for 152 EURB) not including fees which would be in the “taker” fee category with a 0.2% base rate. There will be a 1 ether at 152 EURB sell order remaining in the order book, and the current price will update to 152 EURB. This order cause a slippage of 2 EUR. This doesn’t include the 50% discount for paying with DRPU.
Slippage generally isn’t a big issue for small orders, but for investors who are buying and selling large amounts of cryptocurrency, slippage can be a big issue causing you to obtain less value from an order than you might have otherwise expected. There are a few order types that can help against this scenario, and each one has advantages and disadvantages. The next one will will discuss is the limit order type.
Limit orders are another one of the most common order types found on exchanges. This order type requires the input of two values: your buy/sell amount and the price at which you wish to buy or sell. Limit orders are good for knowing exactly what your buy order will cost, or how much your sell order will be worth if the entire order fills. The drawback of this is that a limit order is not instant like a market order.
Let’s walk through placing a buy limit order on the BTC/EURB pair to see how it works. Here are some starting assumptions:
- The last trade price of BTC was 3500 EURB.
- There is a limit sell order from another investor for 1 BTC at 3505 EURB in the orderbook.
- There is a limit buy order from another investor for 0.5 BTC at 3495 EURB in the orderbook.
- You are trying to buy 1 BTC.
First thing would be filling in a value of 1 in the “Buy Amount” box on the trading widget. Second would be filling in the “Price Per” or “limit” box. This box will be your eventual purchase price for BTC. For a buy order, you can fill in any value as long as it is below the lowest sell order in the orderbook, so in this example you could place a limit buy at 3504.99 EURB, but not one at 3505 EURB or above.
Let’s say you decide to set your order to buy 1 BTC at 3504 EURB and click “Place Order.” Your order will now show up in the orderbook, and you must wait until your order is filled. To fill your order, someone else must decide they want to place a market sell (or similar order) while your buy order is the highest bid price in the orderbook. If their order is less than 1 BTC, your order will be partially filled, until enough similar orders are placed to completely fill your buy.
So, one of the potential disadvantages of limit orders is if there is a large positive (or negative if you placed a sell order) price change after you place your buy order and it has not yet filled, you’ll end up having to place a new order at a higher price or wait for the price to come back down to get your order filled. Limit orders do provide the advantage though of giving you the “maker” fee rate of 0.1% base rate instead of the 0.2% base rate of the “taker” fees not including the discount paying with DRPU provides.
Stop orders are a type of order that essentially allow you to automatically place an order in the future if the market conditions that you specify when placing the order come to fruition. This type of order is less common on cryptocurrency exchanges in general, but can be placed on Bullex as either a stop market or stop limit order type. While they function similarly, there are a few differences that will be explained.
Stop market sell orders are generally used to either secure profits or minimize losses in the event of a market drop. They work by setting a price below the current price, and if the market reaches that price, your order will trigger a market sell for the amount you specified. For example, let’s assume you previously purchased 10 ETH for 100 EURB each and now the price is 125 EURB. You’re unsure if the market is going to keep going up, but you don’t want to sell now in case it does. You can place a stop market sell order for 10 ETH at 120 EURB. So, if the market drops to 120 EURB, your market sell will initiate and you will have secured some profits, but if the market increases to 140 EURB per ETH, you still have all 10 eth and can sell now for more profit. One thing to be aware of is that when a stop market sell triggers slippage can occur just like when normal market orders are placed.
Stop market buy orders function similarly to stop market sells, but everything is reversed. All stop market orders are subject to the 0.20% taker base fee rate.
Stop limit orders function similarly to stop market orders, except instead of a market order being placed when your stop price is reached, a limit order is placed. This provides the advantage of reducing your base fee rate to 0.10% as a maker instead of a taker, but it does have a disadvantage of not guaranteeing that your order is filled. For example, let’s assume the current price of ETH is 106.30 EURB, and you have 5 eth you would like minimize potential losses on. You could place a stop limit sell with a stop price of 100 EURB and a limit price of 101 EURB like shown below:
So now if the price decreases to 100 EURB or below, a limit sell order will be placed at 101 EURB. If the price continues to drop without increasing back above 101 EURB, your limit sell will not fill. If the price does increase to above 101 EURB, your limit order will have filled at the 0.10% base maker fee rate.
Stop limit buys function similarly to stop limit sells, but everything is reversed.
To access these order types, click the “Advanced Orders” button on the bottom of the trading widget and select the order type from the dropdown menu. Trailing stop orders can be seen as a more advanced form of stop orders that can provide more flexibility in securing profits more minimizing losses. The difference between trailing stops and normal stops is that the stop price of trailing stops is not a fixed amount. Instead, it can change based on prevailing market conditions.
Trailing stop market sell orders require 3 inputs:
- Sell amount - The amount of the asset you want to sell
- Trailing Amount - The amount below the highest price the asset has reached after your order was placed where your market sell will trigger.
- Peg Price - The price your trailing amount is referencing. This can be set to last trade price, current highest bid price, or current lowest sell price.
To help explain, here is a scenario:
- You have bought 1 ETH at 106 EURB.
- The current price is 106.3 EURB.
- You think the market will increase in value, but just in case it doesn’t you want to minimize losses.
- You will not be able to trade actively for an extended period of time, so you would also like to secure some profits.
In this case you may decide to use a trailing stop market sell order as your tool of choice. You decide to set a trailing amount of 5 EURB with a peg price of “Last” as seen in the image above. When your order is placed, your stop price is currently 101.3 EURB, because this is 5 EURB below the highest trade price since your order was placed. A few scenarios could occur:
- The price decreases to 101.3 EURB before going above the price at the time you placed the order of 106.3 EURB. This means your stop market sell will trigger and you will receive approximately 101.3 EURB not accounting for slippage or fees.
- The price increases to 110 EURB or any other value above the price at the time the order was placed. Since your order was set with a trailing amount of 5 EURB, your stop market order will now be triggered if the priced drops to 105 EURB.
- If the price raises to 110 EURB and then drops to 105.01 EURB, and then begins to increase again, your stop market order will remain at 105 EURB until it is either triggered or the last trade price increases above 110 EURB which would raise your stop price again.
As you may be able to see, trailing stop market sells can be very useful as a way to minimize losses in case of a market drop while also being able to secure some profit if the market increases and then drops. As with any of the order types that trigger market orders, these fall in the 0.20% taker base fee rate category. Another potential drawback is if your trailing amount is set too small and/or the market is very volatile, the market may have a dip causing your stop market order to trigger before increasing dramatically in value.
Trailing stop market buys function similar to the sells, but everything is reversed, and they can be used to guarantee a purchase of an asset if it begins increasing in value while also providing an opportunity to purchase it for a cheaper price.
Trailing stop limit orders are similar to trailing stop market orders, but instead of placing a market order when the trailing stop value is reached, a limit order is placed. As such, these orders require 4 inputs to create:
- Buy/sell amount - identical to trailing stop markets orders
- Trailing Amount - identical to trailing stop markets orders
- Limit Offset - the offset from the currently calculated stop price at which the limit order is placed if the stop price is reached. For sell orders this is an offset above and for buy orders this is an offset below.
- Peg price - identical to trailing stop markets orders
Fill or Kill
Fill or Kill orders can be access by clicking the “Advanced Orders” button on the bottom of the trading widget and selecting it from the dropdown menu. are similar to market orders, but instead of specifying how much eth you want to buy and purchasing that no matter what, you specify how much you want to buy or sell and the maximum price you are willing to pay for buy orders or the minimum price you’re willing accept for sell orders. Assuming you placed a buy order, Bullex will determine if your entire order can be filled at or below the price you specified. If it can, it will complete the entire order. If it can’t, it will cancel the entire order without filing any of it.
For sell orders, the reverse conditions are true. If you place a sell fill or kill order, Bullex will determine if your entire order can be filled at or above the price you specified. If it can, it will complete the entire order. If it can’t, it will cancel the entire order and not fill any of it.
Immediate or cancel orders are also accessed by clicking the “Advanced Orders” button on the trading widget and selecting IOC from the dropdown menu. They are almost identical to fill or kill orders with one key difference. Instead of cancelling the entire order if it can only partially fill it, it will fill as much as it can immediately and then cancel the rest of the order.
Reserve orders can also be accessed by clicking the “Advanced Orders” button on the bottom of the trading widget and selecting Reserve Order from the dropdown menu. They function almost identically to standard limit orders with one difference. This is the addition of the “display quantity” field on the advanced order trading widget. This allows you to display a smaller quantity in the orderbook than the actual quantity of your order. This can be useful for people placing very large orders and don’t want the total order quantity displayed in the orderbook for all to see. In the example below, a bid for 1 ETH would be displayed in the orderbook, but the order would actually be for 10 ETH at that price.