Crypto Trading 101: Market, Limit, Stop Limit & Trailing Stop Orders Explained

Explore crypto trading fundamentals with our comprehensive guide on popular order types like market, limit, stop limit, and trailing stop orders.

When it comes to cryptocurrency trading, it’s essential to understand the different order types that are available to traders. Sometimes, the difference between a successful trade and a missed opportunity comes down to choosing the right order type.

In this article, we'll explore the various order types that are available on cryptocurrency exchanges like Binance.US. These include common order types like Market Orders, Limit Orders, Stop Limit Orders, and Trailing Stop Orders, as well as conditional order types like OCO (One Cancels the Other), Post Only, Iceberg, and Time in Force (TIF). By understanding these order types, you will be able to navigate the markets with confidence and choose the right order type that aligns with your specific trading goals.

Basic Order Types: Market, Limit, Stop-Limit & Trailing Stop Orders

Most cryptocurrency exchanges allow traders to choose between Market, Limit, and Stop-Limit Orders. These common order types provide traders with basic control over their trades.

Market Orders

Market Orders are the most straightforward order type, allowing traders to buy or sell a cryptocurrency at the current market price. By executing instantly when placed, Market Orders are great tools for traders looking to seize the moment.

However, by prioritizing speed over price, the actual price of execution for a Market Order may differ from the displayed market price, especially in highly volatile markets. Additionally, during periods of high volatility or low liquidity, there may be fewer buyers or sellers willing to transact at the current market price. As a result, your Market Order may fill at a less favorable price, further contributing to potential slippage.

Limit Orders

Limit Orders allow traders to set specific price levels at which they want to buy or sell a cryptocurrency. Unlike Market Orders, which trigger instantly when placed and prioritize speed of execution over price, limit orders will only trigger if the market price reaches or exceeds your specified price.

However, if the market does not reach your specified price, your order will remain pending until the price aligns with your chosen limit. As a result, there is a possibility that your limit order may not be filled, and you may miss an opportunity if the market moves in the opposite direction.

Stop Limit Orders

Stop Limit Orders allow traders to manage risk and have greater control over the execution price of a trade. Like the name suggests, Stop Limit orders combine the features of Limit Orders and Stop Orders. When placing a Stop Limit Order, traders must set two specific prices: the stop price and the limit price.

If the market price drops to the stop price, your limit order becomes active. Then, your trade will only be executed if the asset’s price reaches your limit price. Put simply, by placing a Stop Limit Order, you are effectively saying, "If the asset’s price goes down to a certain level, then sell it at this specific price," thereby protecting yourself from potential downside risk.

Learn the difference between Market, Limit, and Stop-Limit Orders, as well as how to place them on Binance.US.

Trailing Stop Orders

A Trailing Stop Order allows traders to lock in potential earnings while keeping their positions open to greater upside opportunity, so long as the market moves in their favor. Like the name suggests, Trailing Stop Orders automatically adjust, or "trail", the current price of a cryptocurrency, at a set percentage that’s determined by the trader.

For example, if a trader places a trailing stop order and the asset’s price goes up, the trailing price will move up as well. If the price falls, the trigger price will stay at its previous level, effectively protecting the trader's potential gains.

Binance.US is proud to offer comprehensive support for popular order types like Market, Limit, and Stop-Limit orders, in addition to more specialized order types like Trailing Stop Orders.

Previously available only to API traders, trailing stop orders are now available on web and the latest version of the Binance.US mobile app.

Conditional Order Types: OCO Orders, Post Only, Iceberg & More

In addition to the common order types, some cryptocurrency exchanges offer more advanced conditional order types, providing traders with an additional level of control and flexibility over their trades. They are designed to trigger specific actions based on certain market conditions or price movements.

In this section, we’ll provide a brief overview on the following conditional order types: OCO, Post Only, Iceberg, and Time in Force (TIF).

  1. OCO (One Cancels the Other) Order: Traders place two orders simultaneously; if one is executed, the other is automatically canceled.
  2. Post Only Order: An option to ensure a trader’s order is added to the order book as a maker order instead of taker order. Learn more about the difference between Maker Fees and Taker Fees.
  3. Iceberg Order: Placing a large order that is split into smaller orders to conceal the true size of the order.
  4. Time in Force (TIF) Order: Specifying the duration an order remains active before it is canceled, such as Good till Canceled (GTC), Immediate or Cancel (IOC), or Fill-Or-Kill (FOK).

For more information, refer to our guides on OCO Orders and Conditional Order Types (Post Only, Iceberg, Time in Force).

Trade With Confidence

Now that you understand the difference between order types when it comes to crypto trading, it’s time to make your first trade on Binance.US. Sign up for free and start trading 150+ cryptocurrencies. All it takes is a few minutes to get started.

Once you’re ready to dive in, choose from basic and advanced order types that best suit your strategy and get more out of your trades on Binance.US, the only major U.S. crypto platform to offer 0% fee trading on Bitcoin.

Download the Binance.US app to trade on the go: iOS | Android

This material has been prepared for general informational purposes only and should NOT be: (1) considered an individualized recommendation, endorsement, or offer of any digital asset or services discussed herein; and (2) relied upon for any investment activities. All information is provided on an as-is basis and is subject to change without notice. We make no representation or warranty of any kind, express or implied, regarding the accuracy, validity, reliability, availability, or completeness of any such information. Binance.US does NOT provide investment, legal, or tax advice in any manner or form. The ownership of any investment decision(s) exclusively vests with you after analyzing all possible risk factors and by exercising your own independent discretion. Binance.US shall not be liable for any consequences thereof.

Risk warning: Buying, selling, and holding cryptocurrencies are activities that are subject to high market risk. The volatile and unpredictable nature of the price of cryptocurrencies may result in a significant loss. Binance.US is not responsible for any loss that you may incur from price fluctuations when you buy, sell, or hold cryptocurrencies.

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