Cryptocurrency Exchange: Understanding Stop Order and Limit Order

The world of finance and money is witnessing major changes in their transactions. Investors or traders are approaching new techniques and strategies to deal with their transactions. New techniques of trading have emerged as more and more crypto users have started regular dealings in the crypto exchange. Due to the wide presence of crypto assets, traditional trading exchanges have started implementing in the crypto exchanges.

In this article, you will gain more insights into stop order and limit order. You will comprehend the functions of these strategies with respect to their impact on a cryptocurrency exchange, thus solidifying your decision to embrace them during cryptocurrency exchange platform development.

What is Stop Order?

A stop order is an order which enables buying and selling of crypto assets through their price movements. The order transacts when the price moves in a particular direction thus ensuring an increased probability of achieving a predetermined target. This strategy minimizes the loss of investors and locks a certain amount of profits. When the price crosses a predefined price, the stop order executes. There are various types of stop orders such as buy stop, sell stop, stop market and stop limit.

What is Limit Order?

Limit orders are the orders which get fulfilled at or better than a pre-determined price. It signifies the rate at which buy and sell orders are initiated. In buy limit order, the orders are executed at the limit price or the lower price and in the sell limit order the orders are executed at the limit price or the higher one. Limit orders are however not the guaranteed orders. These are mainly used simultaneously with the stop orders.

Difference between stop orders and limit orders

A limit order is visible to the market and it cannot be seen in the market until it is triggered. The limit order is generally conditional on the stop price. For instance, you wish to buy $90 stock at $88 per share then you will apply the limit order. The order is fulfilled when a seller meets the purchase price order of a buyer.

On the other hand, a stop order is divided into two orders. It is generally fulfilled when the actual limit orders are seen and are being crossed in the market.

Strategies for trading cryptocurrency

The latest news of crypto prices is quite wavering. There are many ups and downs in the movement of current market. To be in line with this, a reliable cryptocurrency exchange development company assists exchange owners to integrate various trading strategies into their exchange platforms. The most common is stop-limit order.

Stop-limit orders

• Stop order: If a stop order is initiated for buying and selling of a cryptocurrency, then as soon as the stop price matches the market price, the stop order is executed. It leads to the market order in the cryptocurrency exchange platform. After the period of stop price, users may incur losses.

• Limit Order: This is one of the best orders which every cryptocurrency exchange development platform should inhibit. Limit order comes into force when market reaches a certain specific price. The trade order is set in the crypto exchange till it is met by the right seller.

• Relation with crypto exchange: All those who wish to develop a platform may built it through a white label solution or from scratch. In either ways, the exchange may wish to have maximum user base thus various strategies should be integrated.

Functions of stop and limit order

• Stop order: This strategy limits the loss of a trader by predetermining the order price. In this, an investor applies the stop order after continuous monitoring of the price of asset for weeks.

• Limit Order: In this, a particular time frame with respect to prices is set in which the limit order is executed. The investors have full control over the transactions with their cryptocurrency exchange solution.

• Function of cryptocurrency exchange platform: Cryptocurrency exchange platform development helps set a stop and limit order. Investors can set their transactions in the crypto exchange by notifying the exchange with their stop and limit order price.

Takeaway

Now-a-days the trend is towards trading in a crypto market. Before investing, traders fully analyze the crypto market. They base their decisions strategically by studying the overall market in detail and then take a final call whether to buy or sell.

Therefore, the exchange owners should also move hand in hand with the requirements of the users. Whether you opt for white label cryptocurrency exchange platform development or choose to build your exchange from scratch, integrate the right order types into your exchange.

Besides, it is advisable to get associated with a reputed cryptocurrency exchange development company that can provide you with top of the line exchange platform aligned with your business model.