How to Trade on Binance- Cryptocurrency Exchange
Binance is one of the fastest growing cryptocurrency exchange in the world. Binance is known for its low trading fees(0.1%) as well as fast transaction processing, its technology is capable of processing 1.4 million orders each second, making it a world leader in potential exchange volume.
Binance provides flexibility of trading in different conversion pairs such as BNB,ETH,BTC and USDT.
Market Order (BUY) – In the Market Order option, your ‘buy’ order will be executed against the lowest ask price order available in the market at that point for that given quantity.
In the above situation, if you place a ‘buy’ Market order of 1ETH, then you will acquire
1)0.134ETH at 0.105225BTC/ETH
2)0.524ETH at 0.105226BTC/ETH, and the remaining
3)0.342ETH at 0.105227BTC/ETH, averaging out the cost to 0.105226BTC/ETH
Market Order (SELL) – In the Marker Order option, your ‘sell’ order will be executed against the highest bid price order available in the market at that point for that given quantity.
In the above situation, if you place a ‘Sell’ Market order of 1ETH, then your ETH will be sold as following:
1)0.665ETH at 0.105067BTC/ETH, and the remaining
2)0.335ETH at 0.105062BTC/ETH, averaging out the selling price to .0105065BTC/ETH
Market order option is the fastest method for trade execution. It is beneficial for participants who plan to hold the security for long and few points in the price (up or down) doesn’t make a large impact.
This is the least favorite tool for day traders as it provides little or no control on the price at which trades will be executed and few points in the price can have a huge effect.
A limit order in Binance is an order that sets the maximum or minimum at which you are willing to buy or sell a particular currency.
For Instance, in the above situation last traded price per 1 ETH is 0.104453BTC, we can either go forward placing a market order as we discussed in the previous section or we can manually input a price as per our expectation and understanding of the market on the basis of previous trends and technical analysis of ETH.
We can place a Limit ‘Buy’ order at 0.10300BTC/ETH (A) which is lower than the last traded price and market price. The order will be executed when it will encounter a matching or better ask (sell) order for the given quantity.
Similarly, we can place a Limit ‘Sell’ order at 0.105157BTC/ETH (B) which is higher than the last traded price and market price. The order will be executed when it will encounter a matching or better bid (buy) order for the given quantity.
The order might not be immediately executed, till then it will be shown in the Open order tab where it can be cancelled for a new order.
Unlike Market order where we have no control over the price at which the order will be executed, Limit order ensures that we pay/receive exactly the same amount or better that we stated and that the order will not be executed until it finds a matching/better order.
Stop Limit Order
In a volatile market like Cryptocurrency, a sudden decrease in prices is common. This might eventually lead to loss of initial capital you put in.
To ensure the safety of the initial capital or to book a minimum amount a profit, Stop limit option is a blessing to the investors.
A Stop limit order or better known as Stop-Loss in the Stock Market is an invaluable tool to escape market uncertainties. Binance recently incorporated this function.
Consider the above situation, the last traded price is 0.104461BTC/ETH.
‘Stop’ will be the price at which the ‘Limit’ function will be executed i.e If the price of ETH ever falls to .0101BTC/ETH (A) , the ‘limit’ function will come into existence.
In the above situation, we set the Limit price as 0.1BTC/ETH (B). Our order will be executed at a price no less than 0.1BTC/ETH
We can set the limit price above/below the ‘Stop’ price as per our understanding and analysis of the market. This will ensure certainty of profits and capital in a bearish market.
You can read more about Stop Limit function at – How to use Stop-Limit Function
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