How to Trade Cryptocurrencies and the different types of trades you can take

Published on
September 26, 2022
Published by
Mathew Fernandez

When it comes to understanding how to trade cryptocurrencies, understand that what you are simply doing is predicting where the value of that specific cryptocurrency is headed and capitalizing on that if your prediction is successful.

When trading on an exchange there are 3 different types of trades you can take. A market order, a limit order and a stop limit order.

Market Order:
• A market order is when you buy or sell a cryptocurrency at a current price in the market.
• When you place a market order trade you get placed into the trade immediately.
• You take a buy market order if you want to buy a cryptocurrency at a given price and a sell market order is placed when you want to sell a cryptocurrency at a specific price.

Limit Order:
• A limit order is different than a market order in the sense that when you buy or sell your cryptocurrency you will not be placed into the trade immediately. Instead you will be entered in the trade at a set time you have set specifically for when you want to enter the market.
• When that certain price level hits it will then automatically place you into the trade.
• The specific price you want to get in at for a buy or a sell is the price you would place for that limit order.
• If that limit order price is never reached then the order is never filled. It must be reached in order to be an active trade.

Stop Limit Order:
• In a stop limit order you will buy or sell your cryptocurrency at a limit price only after a specific price is reached.
• A stop limit order is slightly different because it has two different prices; the stop price and the limit price.
• The stop price will change the order to a buy or sell order and the limit price will be either the maximum price a trader is willing to buy or the minimum price a trader is willing to sell.
• When the market reaches the specific stop price the trade becomes active and the order is filled.