About 70% of new crypto investors lose their investment by making the wrong trade call. That’s because you can be caught in the web of buying or selling at the wrong moment. This can have a significant blow on your crypto capital. And that is due to the market fluctuation in the crypto market.
We created this guide to explain the two types of orders—market order and limit order—you can leverage while trading on the AABB exchange.
What is a Market Order?
A market order is an instruction you set on your crypto exchange to buy or sell a crypto asset at the current market price. This is regarded as the first primary trading order type. Let’s assume that you use the AABB exchange as your trading platform. An order gets executed immediately when you generally hit the buy or sell button.
For every market order, the buy order will execute at a price the seller is willing to sell for. That is the nearest ask price. A market sell order executes a trade at the price the buyer is ready to make the purchase. That is the nearest bid price. Placing a market order typically relates that you want to buy or sell a crypto asset immediately.
While there is a guarantee that you will enter and exit a trade position with a market order, there is no guarantee that the execution price will be the same. That’s because a delay might occur while executing your order. Thus, the crypto exchange platform might execute at a different price from the initial price you saw on clicking the “buy” or “sell” button.
For instance, if you place a market order to buy AABBG at $300 per token. The price might have increased to $320 or reduced to $280 while executing the order. This will reflect in your AABB wallet after the transaction. This explains that the price difference can be a significant trading advantage. This order type is often suitable for highly liquid crypto assets frequently traded with a large market cap.
How to Place a Market Order on AABB Exchange
- Open the AABB Exchange on your PC browser or the mobile app on your smartphone.
- Select a market pair—a crypto/crypto or crypto/fiat trading pair—you want to trade. For instance, AABBG/BTC or AABBG/USDT.
- Click the “buy” or “sell” tab. Then, select the “market” button.
- Use the slider to set the size of your order.
- Confirm your order.
What is a Limit Order?
A limit order is an instruction for a buy or sell request at a specific price. This special price is often the minimum or maximum price for a sell or buy order. Most times, you want to buy at a better price. You want the crypto asset purchased at the limit price or lower for a buy-limit order. Likewise, you want the crypto asset sold at the limit price or higher for a sell-limit order.
Although limit orders are helpful to ensure that you don’t spend more or less, there is no guarantee that they will be executed. Executing limit orders only exists when the asset’s market price reaches the limit price. Limit orders are best used if you are not an active trader or not rushing a trade.
For instance, you can decide that you want to buy 10 AABBG when the price falls to $1,000 or lower. Or you can place a sell order to sell 10 AABBG when the price goes beyond $1,500. One significant advantage of a limit order is that your order won’t be fulfilled if the limit price is not reached.
How to Place a Limit Order on AABB Exchange
- Open the AABB Exchange on your PC browser or the mobile app on your smartphone.
- Select a market pair—a crypto/crypto or crypto/fiat trading pair—you want to trade. For instance, AABBG/BTC or AABBG/USDT.
- Click the “buy” or “sell” tab. Then, select the “limit” button.
- Use the slider to set the size of your order.
- Select the limit price for execution and the expiration instructions.
- Confirm your order.
5 Significant Differences Between Market Order and Limit Order
While it is easy to get carried away with explanations, we compiled five (5) significant differences between a market order and a limit order. Knowing the significant differences will give you an insight into the proper order to place while assessing the crypto market via the AABB crypto exchange platform.
- Market order ensures that an order is executed based on the speed of the transaction instead of the transaction’s price. As for limit order, the transaction is performed based on the price limit set. If the crypto value of a token (such as AABBG) goes beyond the set parameters for the limit orders, the transaction will not happen.
- When you place market orders outside of trading hours, they are placed at the market price, and they will open the next trading day. But you can place limit orders outside of market hours. The orders will be in the queue and processed for the transaction as soon as trading begins.
- A market order is an order that takes place immediately at the market price or existing crypto price. This transaction is executed as soon as possible. But a limit order is a crypto trade executed when the price level is me. You set a minimum or maximum price you are willing to buy or sell a token. Once that condition is met, the price level is triggered, and the crypto exchange, such as the AABB exchange, will execute your order.
- When placing many market orders, there is a tendency for the price to be different. That is because setting and executing large orders for market orders consumes time. But you won’t experience such when you leverage the limit order function on any crypto exchange.
Although some limit orders might not be executed when the liquidity is not enough when it’s time to fill the orders, even if the market reaches the target price. This may lead to partial filling of order or no filling resulting from price restrictions.
- Market orders can have low transaction fees on the crypto exchange. But limit orders can attract high transaction fees because their executions can sometimes be complicated.
One more thing you need to know as an advantage of limit order is that it is beneficial to use when you trade a highly volatile crypto token.
Should You Use Market Order or Limit Order?
As a crypto trader, this question is critical to ask when you lift some amount of money in your crypto wallet, such as AABB Wallet, to place a trade. As a crypto investor or trader, you want to ensure that you make the best profit possible. As a result, you contemplate which order to leverage while making a trade call on crypto exchanges like the AABB exchange.
But you can conduct a simple test to know what works for you the best. This gives you insights into either a market order or limit order to help you fulfill your buy or sell call. However, a market order is suitable for you if all you want is to complete a trade. But limit order is your best bet if you want to reach a specific price for trading a token like AABBG.
On the other hand, you might have a change in preference over time. That might be due to the market trend when you observe your dashboard on the AABB exchange. Thus, that can make you cancel a limit order you set to buy a token at a particular price since it doesn’t execute. As a result, you can place a market order and cancel the limit order.
For instance, let’s assume you want to buy an AABBG token. And you placed a limit order on your AABB exchange connected to your AABB wallet. Now, the limit order is set to buy at $200. But if the trade wasn’t filled, you can cancel it and place a market order for the market price at that current moment. There are pros and cons attached to both; there are no specific answers to which is appropriate for you. However, your crypto investment options can give you a clue. If you are investing for the long term, you can leverage the market order to buy at the market price. On the other hand, you can leverage the limit order to purchase token highly liquid crypto assets if you are careful about how slight price differences can make a significant change.
