There are situations where quick thinking mixed with emotions can help make profits if executed correctly. And this is where crypto market order plays an important role.
No matter how skilled or experienced you are, sometimes your emotions or nerves will get the best of you when it comes to crypto and trading.
The most significant advantage of the market order is that your exchange platform can execute it swiftly, as the action depends on the best price present at the moment. Does it sound interesting? Read more to know what crypto market order is and how to select the right one for your portfolio.
Market Order – An Overview
When it comes to cryptocurrencies and the exchange of assets, a market order is a command to sell or buy a security at an optimal price currently available in the market.
While you are placing a trade online, pushing the buy or sell button executes the order instantly. For example, a market sell order runs at the closest bid price, and the market buy order performs at the nearest ask price.
You can go with a market order when you want to sell or buy crypto immediately to avoid missing out on a profit or to cut impending losses. Crypto market order helps you enter and exit a position quickly without any guarantees of a price.
It is best to choose market orders for very frequently traded, and liquid assets like cryptocurrencies bought and sold at an investor’s desired price.
When To Place Market Order?
Market orders can save you during dire situations. For example, if you are caught in a compromising position where the market is moving against you, you can use the market to bail yourself out.
Controlling the exit and entry prices is a big concern to many investors. This is where market order comes in.
You can go with a market order when:
- You want a swift performance at any cost
- You are trading a small number of shares
- You are trading a liquid stock with a narrow bid-ask spread
How to Select the Crypto Market Order?
Consider Open Position
If you want to limit your losses from an open position, then select stop-loss market orders.
With this, you have the option of choosing the order trigger from mark price, last trade price, and index price. However, stop-loss market orders cannot be used to add to a position or open a position.
Choose Take Profit Market Orders
Take profit market orders lets you set a target profit price to close out of an open position. Trigger price here shows the price that will trigger the take profit order to place a market order on the order book.
Like a stop-loss market order, you can choose the order trigger from index price, mark price, or last trade price.
How to Place Market Order?
You will find an option to replace the order type on the order screen on the crypto exchange platform. Always double-check the tab to ensure that you are selecting the right kind of order.
When a stock is actively traded, the market order placed will be fulfilled instantly, unless there is a high volume of trade in that stock at that moment.
Even though your market order will move forward ahead of other pending orders, it still has to wait for the previously submitted orders. Therefore, the more crypto market order scheduled to process before yours, the greater the risks of fluctuating stock price you incur.
Remember that sometimes market order brushes on the buy-high, sell-low approach. So, always reserve using market orders only for trades that need to happen soon and where the price isn’t a priority.