February 19, 2021

Advanced Trading Orders Guide

Basic trading orders such as market and limit orders are easy to use. They are not difficult to understand and can help us to start trading in the crypto market.

Basic trading orders such as market and limit orders are easy to use. They are not difficult to understand and can help us to start trading in the crypto market. However, advanced traders would need more advanced options. If they have to execute their trading strategies, advanced trading orders will be certainly necessary. 

This guide will go through some of the advanced orders traders can use in most of the crypto exchanges in the market. Take into consideration that some of these orders are not going to be available on the platform you use. 

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Stop Limit Order

A stop-limit order combines both a stop and a limit order. These orders allow traders to reduce their risk while trading in the market. When you use a stop-limit order, you will have to set two different orders.

With the stop order, you will be selecting the price target at which your trade starts. With the limit order, you will close that trade if the price of the asset reaches this point. Furthermore, some platforms will allow you to set a time range for your orders. 

Dispute being very useful for traders, they can also not get executed. The price of the limit order might never be reached. Basically, when the stop-loss order is reached, a limit order will be used to close the position. 

As we have seen before, we cannot be sure the limit order will be executed. This is why it is so important to have a clear analysis of the market and how far the price of the asset could go. 

Stop Loss Order

With a stop-loss order, traders will be able to be part of a trade but reducing the risks of that specific movement. These stop-loss orders can be very useful for those traders that are using derivatives and leverage. 

These orders are very useful because you don’t need to be looking at the charts all the time. Indeed, you can set up a stop-loss order and it might get executed while you are away. This will help you to reduce your risk but get exposure to a very positive trade.

For example, if you are trading with leverage and you open a long position if the market moves in the contrary direction you can get liquidated. By using and setting up a stop-loss order, you will be able to leave that trade that moved in the wrong direction. 

This would help you to avoid liquidation. If the trade does not get executed it means that you are still on a good track and that you are registering gains. 

Trailing Stop 

A trailing stop is an order that would help traders maximize their benefits while trading in the market and avoid losing an opportunity to exit a trade at a better price. If you open a long order and the market reaches your target but continues moving higher, you have lost potential profits to your trade. 

This is where a trailing stop will help. The order will be following the price if the market moves in a favourable direction. However, when the market retraces, it does not move back to the previous level. 

The trader will have to decide which is going to be the trailing price. Some trading platforms allow it to be a percentage or a fixed price. Everything will depend on the risk you have and on your trading strategy. If the price moves in the other direction, once it reaches the market order it will get executed. 

OCO Order

A one-cancels-the-other order, also known as OCO, is an advanced trading order that will help traders have larger control over the trades they open. With it, traders can set up two different orders. If one is reached, then the other gets automatically cancelled. 

OCO orders are usually a combination of stop orders with limit orders. At the moment, Binance is one of the exchanges that is offering this type of order for traders. With it, users can set up clear price limits when the market moves a lot in a very tight price range. 

The cryptocurrency market is one of them where OCO orders can be very helpful. For example, you could set an OCO order that would create a buy limit order at a support level and a sell limit order at a resistance level. This is a great strategy for those users that follow a retracement strategy. 

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