Trading Basics: Understanding Trade Order Types

Whether you are a beginner trader, or a crypto market veteran, trade orders play an important role in every trader's toolkit. Understanding the different types of trade orders can help support your trading and investing strategies, as well as help you to capitalise on market conditions. This guide will discuss the different order types available to you on Coinstash and how best to use each of them.

Trade Orders Explained

A trade order is simply a request to buy or sell a particular cryptocurrency. It’s an instruction given by a trader to an exchange like Coinstash, specifying the quantity and price at which they want to buy or sell an asset. Trade orders can be executed immediately, or they can be scheduled to execute at a later time. There are several different types of trade orders, each with their own unique features. 

What is an Instant Order?

An instant order is a command to buy or sell an asset at the price currently quoted on the platform, and is the most basic type of trade order on Coinstash. An instant order will execute immediately and will be filled at the quoted price at the time you confirm the trade. If you’re placing a trade on Coinstash, hitting the Buy/Sell button will execute an instant buy/sell order immediately. 

Instant orders are typically used by traders when they want to buy or sell an asset immediately, either to avoid missing a potentially profitable move or to cut their losses. They allow traders to enter or exit positions as quickly as possible. 

Example:

You’re on Coinstash and you want to buy 1 Bitcoin (BTC), which is currently trading at $20,000. 

You’re happy paying $20,000 and don’t want to wait for the price to go lower, so you place a buy market order for 1 BTC, and the order executes at the quoted price of $20,000. 

What is a Limit Order?

A limit order is a command to buy or sell an asset at a specific price — or better if possible. A limit order will only be filled if the price of the asset reaches the limit price. If the market price does not reach the specified price, the limit order will remain open until it expires or is canceled. 

Limit orders are useful for traders who want to buy or sell a cryptocurrency at a specific price or better and are willing to wait for the market to reach that price. Limit orders on Coinstash are part of our Conditional Orders. They guarantee that your order will be fulfilled at the limit price. 

What is a Buy Limit Order?

Buy Limit Orders helps you control how much you pay for an asset. 

You can set an order to buy an asset at or below a specific price. Buy Limit Orders must have a trigger price below the current market price. In this case, you are waiting for the asset to fall to your preferred purchase price.

Example:

You want to purchase 1 Bitcoin and expect its price to drop from $20,000 AUD to $15,000 AUD.

You would place an order for 1 Bitcoin with a limit price of $15,000 AUD/BTC.

This trade will not execute unless the price of Bitcoin drops to or below $15,000 AUD.

What is a Sell Limit Order?

A Sell Limit Order, more commonly known as a Stop Loss Order, helps you limit any losses. 

You can set the amount of an asset to sell if its market price drops to a specified level. Stop loss orders must have a trigger price lower than the current price. If your trade doesn't work in your favour and the price drops, you can exit the position without losing too much.

Example:

You just bought 1 Bitcoin at $25,000 AUD because you expect the price to go higher.

But you want to minimise your downside risk, and limit your potential losses to $5,000 in case you are wrong.

You set up a stop loss order at $20,000 AUD/BTC.

If Bitcoin price drops to or below $20,000 your position would be sold.

What is a Stop-Limit Order?

A stop-limit order is a conditional trade order over a set time frame that combines the features of market order with those of a limit order and is used to mitigate risk. A stop limit order will only execute at a specified price or better, but only once the market reaches a specified stop price.

What is a Buy Stop Order?

A Buy Stop Order helps you buy at your preferred prices. 

You can set an order to buy an asset only once the price hits a specified stop price above its current market price. 

Buy Stop Orders must have a trigger price higher than the current price. In this case, you wait for the price to go up and show confidence in the asset before buying. They are commonly used when buying breakouts.

Example:

You want to purchase 1 Bitcoin. The price is currently $20,000 AUD, and you expect it to go up to $25,000.

You would place an order for 1 Bitcoin with a stop price of $25,000 AUD/BTC.

Once and only when the price of Bitcoin hits $25,000 AUD/BTC will your order become live, and it will execute at the next best available price. 

What is a Sell Stop Order?

A Sell Stop Order, also known as a Take Profit Order, helps you protect any gains. 

You can set the amount of an asset to sell if its price rises to a particular level above the current market price.  

Take Profit orders must have a trigger price above the current price. In this case, you are waiting for the price to rise to a level where you want to sell.

Example:

You just bought 1 Bitcoin and expect its price to increase from $20,000 AUD to $25,000 AUD.

You would place an order for a take profit price of $25,000 AUD/BTC.

This trade will not execute unless the price of Bitcoin rises to or above $25,000 AUD.

Start Your Trading Journey with Coinstash

Want to start crypto trading but not sure how? The easiest way to start your crypto trading journey is with an online exchange like Coinstash. With low fees, low spreads and a feature-packed app, Coinstash makes it simple and safe to buy, sell and hold crypto in Australia.

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