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The Basics of Crypto Trading
Learn about market orders, limit orders, and stop orders for crypto trading
Crypto trading involves buying and selling cryptocurrencies to profit from price movements. Unlike investing (holding for the long term), trading focuses on shorter-term price changes.
Key Point: Trading requires understanding different order types to execute your strategy effectively.
Market Orders
A market order executes immediately at the current market price. It's the fastest way to buy or sell.
Example:
Bitcoin is trading at $45,000. You place a market buy order for 0.1 BTC. Your order executes immediately, but you might pay $45,010 due to slippage.
Limited Orders
A limit order lets you set a specific price at which you want to buy or sell. It only executes when the market reaches your target price.
Buy Limit Order
Sell Limit Order
Benefits:
• Control over execution price
• Lower trading fees
• No slippage risk
• Can set and forget
Stop Orders (Stop-Loss)
Stop orders help limit losses by automatically selling when the price falls below a certain level. They're your safety net in volatile markets.
Stop-Loss Order
Stop-Limit Order
!!! Important Note:
Stop orders become market orders when triggered, so execution price may vary from your stop price in fast-moving markets.
Practical Trading Example
Scenario: Trading Ethereum (ETH)
Step 1: Entry Strategy
ETH is at $3,200. You believe it will rise, but want to buy on a dip. Place a limit buy order at $3,150.Step 2: Profit Target
Once filled, immediately place a limit sell order at $3,400 to secure a $250 profit per ETH.Step 3: Risk Management
Set a stop-loss order at $3,000 to limit losses to $150 per ETH if the trade goes against you.
