There are various methods to place buy and sell orders for cryptocurrencies, just like there are in conventional stock market exchanges. However, it's important to understand how each one operates. A variety of trade kinds are available to traders, allowing them to profit from market volatility or hedge against it. When venturing into cryptocurrency exchange software, it is necessary to provide maximum order options to enhance user experience. This article will explain the main crypto order types: basic, advanced, and conditional.
Order Book
In the financial markets, the investor uses the term order to purchase or sell investments. These investments can take any shape, including stocks, bonds, cryptocurrencies, etc. In particular, crypto orders are used to influence how crypto transactions are handled on a platform for crypto exchanges
Here is a list of the different kinds of crypto orders that we must integrate when developing a crypto exchange platform.
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Basic Orders
The following are the most typical kinds of crypto orders:
Market Order
The simplest type of order to carry out a cryptocurrency buy or sale is a market order. These orders only specify the number of cryptocurrencies that a user wants to buy or sell immediately. The price at which they get executed will be the best one at the time. You cannot execute market orders with any order condition.
Limit Order
The order book purchases the cryptocurrency at the specified limit price or a lower price when a user places a limit order to buy. When a user executes a limit order to sell, the cryptocurrency is sold at the limit price or a higher price.
Limit orders come in use to buy or sell cryptocurrencies when the market price reaches a specified value. Limit orders become executable only when the market hits the specified limit.
Stop Orders
Stop orders are similar to limit orders, but become market orders once the pre-specified price, i.e. stop price, is reached. These types of orders â sell-stop orders/buy-stop orders help protect profits and limit losses of the trader. The stop price of the sell stop order is lower than the market price, and the stop price of a buy stop order is above the market price.
Advanced Order Types a Crypto Exchange Should Have
Conditional Orders
The criteria listed below link various orders together for a variety of purposes. Although they are made up of order types from the Basic and Advanced parts above, conditional orders are also regarded as order types.
One Sends the Other | OSO
OSO (One Sends the Other) orders, also referred to as conditional closes, activate a secondary order only in the event that the main order executes.
OSO Example
A limit order can be put in to start a position by a trader who is new to the market. When their limit order is executed, they can use an OSO/conditional close order to immediately open a stop loss. The stop loss could fill before the limit order, leaving them in a bad trade, if they were to file both orders normally.
An example of an OCO
A trader may set up their stop loss and take profit orders as an OCO order if they have an open long account. This would enable them to simultaneously have two exit orders open without running the chance of the second order executing after the first order closes the position. For instance, the stop loss would be immediately canceled if the take profit was triggered.
One Sends the Other | OSO
OSO (One Sends the Other) orders, also referred to as conditional closes, activate a secondary order only in the event that the main order executes.
OCA | One cancels all
The OCA (One cancels all) order type lets traders program multiple (3 or more), potentially unrelated orders as a group with the effect that when one order executes, all others are automatically canceled. If one of the orders can only be partially filled, the other orders will remain open and adjusted to include the remaining value of the partially filled order.
Iceberg / Hidden Orders
A large order size is divided into several limit orders of the same size by iceberg orders, also known as hidden orders. Over time, each equal part is separately offered to the market. The purpose of an Iceberg/Hidden Order is to conceal the real order quantity because occasionally, the presence of large orders in the order book can have an impact on an asset's price.
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What's Next
When developing a crypto exchange, we must ensure an efficient user experience. That requires a thorough understanding of crypto order types. Knowing the trading tools at your disposal is crucial, whether a user wants to use stop orders to reduce the possibility of loss or OCO orders to prepare for multiple outcomes at once.
You may connect with our skilled crypto exchange developersif you have a project in mind and want to integrate these crypto order types.
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