The most basic type of trading order is a Crypto MARKET ORDER. Traders that want to be sure that the deal they’ve chosen will be executed place them. Market Orders are executed immediately and the trader simply places an order to purchase or sell an item, such as Bitcoin, immediately at its current price.
What is a Market Order?
Market orders are the most widely used type of order and this is due to their high liquid content, meaning, it indicates a stable market with low price changes. In a liquid market, it is thus easier to buy or sell cryptocurrencies since buy or sell orders are filled more quickly due to the increased number of market participants. They’re also believed to be inexpensive.
A buy/sell button is available on several brokerages, making market orders easier. So when a trader agrees to execute a market order, he or she is agreeing to sell at the BID price or buy at the ASK price.
Market orders are expected to be executed in real-time, or as near to real-time as practicable. Traders say “the order has been filled” when a market transaction has occurred and the order has been fulfilled. Market orders are always filled immediately; otherwise, it is not executed. There are two types of market orders: buy and sell.
Market Orders: Buy Order
Here’s a 3-minute video showing you how to place a market BUY order on Phemex:
Market Orders: Sell Order
On the other hand, here’s how you place a Market Sell Order with a 2% Stop Loss:
When compared to limit orders, market orders are extremely different. The key distinction between the two is that crypto traders employ limit orders to acquire crypto assets when a specific price is met.
This is a particularly effective technique if crypto traders expect prices to fall. When traders wish to initiate a long bitcoin position, they frequently use these. Before placing market orders, crypto traders should check the bid-offer spreads. This is due to the fact that a narrower spread indicates more liquidity and a more competitive market.
Advantages of Using Market Orders
The advantage of a market order is that it ensures that your trade will be completed immediately. However, there are three key advantages to using a market order, depending on the situation:
1. Market orders allow you to execute your trade instantly
Your order will be filled at the current price of the asset being traded within seconds or minutes at most, depending on how quickly the order book fills up with matching orders from other traders. This means you won’t have to wait for your trade to complete before moving on to the next one or making other trades in the future.
2. There are no restrictions on when a market order can be placed.
You don’t have to wait for the market to open to crypto; if you’re going on vacation and still want to trade, you can place an order before leaving home and have it filled by the time you get there.
Market orders surely are an advantage, especially if an event occurs that could cause prices to fluctuate dramatically in a matter of seconds, such as when news about a large company is released that could affect its coin price. If this occurs while you are away from your computer, putting a market order will ensure that it is filled as soon as possible.
Is there a disadvantage to using Market Orders?
The major drawback of placing market orders on an exchange such as Phemex is that you are agreeing to the exchange filling your order at the “best price possible for that time,” which means that traders who agree to higher prices will have their market orders filled first, while traders who are more price-sensitive will lose out. It has the disadvantage of negatively affecting more price-conscious traders.
In actuality, they are only guaranteed to execute at the exchange’s best price (i.e., “first come first serve”). This means that if there’s an order on the books that’s even better than yours — i.e., someone else has placed an order at a greater price than yours — you’ll still get supplied at the higher price rather than at the level you want.
Traders who agree to a higher price, for example, may see their market orders filled as the exchange tries to match the best price. If there are not enough shares available at this price, the trader’s order will be canceled without being executed (i.e., not filled).
Due to the rapid movement of the market or volatility, slippage happens when an order is fulfilled at an unfavorable price. It usually happens with low-priced securities like penny stocks, where a few cents difference between the bid and ask prices can result in big profits or losses if trades are done manually using limit orders.
My Final Thoughts on Crypto Market Order
Market Orders have always been the easiest way to enter or exit a transaction quickly. Your best bet is to think about your particular scenario and figure out whether you should use a market order or anything else. This type of order is used by people who have no interest in paying attention to the price trend, but only need to execute their trade as quickly as possible.
Why do people use market orders?
When you don’t have time to wait for a crypto’s price to reach your chosen target price before selling or buying it, that’s when market orders are used. You can also use them if you need to get rid of an asset quickly and don’t care about the price when selling or buying it.
That is all for market orders. You can check it for more videos where I talk about day trading crypto (simulated, leveraged trading).
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