When placing an order on an exchange, the first step is choosing an order type. The most common are market orders and limit orders. The difference isn’t whether you’re buying or selling, but whether you care more about “getting filled right away” or “controlling the price.”
Coin mentioned in the article: $BTC is quoted at 74,086 (24h +0.53%).
■ First, get to know the order book
Spot trading on an exchange is matched through the order book: buy orders are sorted from highest to lowest price, and sell orders from lowest to highest. The gap between the highest bid and the lowest ask is the bid-ask spread.
Every order you place either matches an existing order in the order book or is added to the book as a new order, waiting for someone else to match it.
■ Market orders: Get filled first, worry about the price later
A market order doesn’t specify a price. It executes immediately at the best prices currently available in the order book. The advantage is speed, making it suitable when you need to buy or sell right away.
The trade-off is that you can’t control the execution price. If your order is large, or the trading pair is relatively illiquid, a market order may sweep through several price levels in the order book. The average execution price may then differ from the price you saw when placing the order. This is called slippage.
■ Limit orders: Control the price, but execution isn’t guaranteed
With a limit order, you set the price yourself: a buy order will execute only at your specified price or lower, while a sell order will execute only at your specified price or higher. If the market doesn’t reach your price, the order stays in the order book waiting—and it may be only partially filled.
Many exchanges also offer different time-in-force options: GTC remains active until filled or canceled; IOC fills whatever portion it can immediately and cancels the rest; FOK either fills the entire order at once or cancels it entirely.
■ Stop-limit orders and a few tips
A stop-limit order requires two prices: a trigger price and a limit price. Once the latest price reaches the trigger price, the system places a limit order at your specified limit price. If the market moves too quickly, that limit order may not get filled in time.
During periods of sharp volatility, watch out for slippage when using market orders. For larger amounts, consider placing limit orders in smaller batches. Before submitting an order, double-check the price, quantity, and buy/sell direction—accidentally adding an extra zero is more common than you might think.
■ A few final words
The order type itself doesn’t determine whether you make or lose money. It determines how much price deviation you’re willing to accept in exchange for execution speed. First decide which matters more to you, then choose your order type. Don’t trade products you don’t understand; try a small amount first.
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