Education, Investing

What You Should Know About Market and Limit Orders in Crypto Trading

Trading cryptocurrencies is as much an art as is a skill — that can be very profitable. But being glued to the screen waiting for the perfect price is something that doesn’t help any trader.

That’s why market orders and limit orders exist. They can help guide your trading strategy. But first, it’s a good idea to learn how the market and limit orders work.

Get to know how to create them and how they can give you an edge on your trading goals.

What are Market Orders and Limit Orders?

Both methods have their advantages and drawbacks, depending on your trading style. But let’s dive a little deeper into what exactly are market orders and limit orders.

Market Orders:

Market orders, buy or sell orders, you place immediately. The trade is executed almost instantly, be it buying or selling.

The biggest advantage of market orders is that the trade usually gets processed right away. But since the cryptocurrency market is so fast and unpredictable, you could have an issue with slippage.

 Slippage, the difference between the expected price and the actual price, can happen when your market order isn’t executed immediately.

Limit Orders:

Limit orders are buy or sell orders you place on a specific cryptocurrency. For example, if a cryptocurrency is trading at $13.00, you can place a buy or sell order when the price hits $10.00.

The biggest advantage of this method is that you don’t have to watch the market all day. You can just set your order and wait. Once the price hits your target, the trade will automatically execute.

The biggest drawback is that the trade won’t go through if the price target isn’t met. Using the example above, the price goes down to $10.01. Then goes back up without reaching the $10.00 limit order threshold. In this case, the limit order wouldn’t execute, and the trader misses an opportunity to execute a trade.

How to Create a Market Order and a Limit Order?

Depending on what type of order you choose, there are a few steps you have to take for each one.

Here we’ll walk you through how to place a market order and a limit order:

Market Order:

  • Open the brokerage account or exchange platform of your choosing.
  • Select the cryptocurrency you want to trade.
  • Choose the amount you want to buy or sell (most platforms display the equivalent amount in fiat currency for this step).
  • Once you place your trade, the platform will process the trade. 

Note: If the platform you choose doesn’t differentiate between market orders and limit orders, the default option is usually a market order (buy/sell).

Limit Order:

  • Similarly, open the brokerage or exchange platform and select the cryptocurrency you want to trade.
  • If the platform has the option for a limit order, you need to select it.
  • Place the target price you want to buy or sell, and the amount you want to trade.
  • Once completed, you can follow your trade on the open orders tab and see if it has been executed or not.
  • Also, with limit orders, most platforms give you the option to cancel open orders if the trade hasn’t occurred yet.

How can Market Orders and Limit Orders Help You Trade?

Market orders and limit orders should both be in the mind of traders. If used correctly, they can enhance your trading style and strategy.

For beginners, limit orders can help you take away that urge to be glued to your screen. You can set orders without having to stress about timing the market. 

What method is better depends on you and how you want to trade. If you’ve researched the market and are ready to make a trade at current prices, a market order is perfect for you.

But neither order type is a substitute for due diligence. There are several reasons why cryptocurrency gains value, which makes trading profitable. If you’re not proficient in the crypto space; learn more about crypto trading, and never trade more than you can afford to lose.

If you’re a beginner and want to know how to buy Bitcoin, check out our “Guide To Buying Bitcoin”. You can also learn about crypto and trading in the “How To Invest In Cryptocurrency” section on the Abra site.

Make the Best of Your Trades With Abra!

If you’re a seasoned trader or just starting on your crypto journey, Abra can help you make the best of the crypto trading world!

Trade with low fees and get cashback on your trades. Download the Abra app, fund your account, and start trading today!

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About Abra

Established in 2014, Abra is on a mission to create a simple and honest platform that enables millions of cryptocurrency holders to maximize the potential of their assets. Abra enables both individuals and businesses to safely and securely buy, trade, and borrow against cryptocurrencies – all in one place. Abra’s vision is an open, global financial system that is easily accessible to everyone.

Why Abra

Based in the United States, Abra is available in over 150 countries and makes it easy to convert between crypto and a wide variety of local fiat currencies. With over 2MM customers, $7B in transactions processed, and $1.5B in assets under management, Abra continues to grow rapidly. Abra is widely loved and trusted – in April 2022, reviewed and rated Abra amongst the top 5 most popular crypto wallets in the market. Abra is backed by top-tier investors such as American Express Ventures and First Round Capital.

How Abra Protects Your Funds

Abra places clients’ financial objectives and security first. Abra practices a culture of risk management across all levels and functions within the organization.

Abra employs a state-of-the-art enterprise risk management framework that comprises a comprehensive set of policies, procedures, and practices detailing all applicable risk-related objectives and constraints for the entirety of the business. Abra has instituted a complete set of requisite systems and controls that continuously enforce these policies, procedures, and practices to manage all operations, including credit and lending. Abra’s independent Risk Committee comprises experienced compliance, risk, securities, and fraud operations professionals with backgrounds in industries ranging from traditional and digital assets banking, payments, remittance, to fintech.

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