Advanced Order Types

Advanced Order Types

Advanced Order Types

Other more advanced order types that traders can implement are noted below.

Stop Orders

Advanced order types include stop orders, which can come in two forms: a stop-limit order or a stop-market order. The benefit of stop orders is the trader is “stopped out” of their position once the price hits the stop order; it can be used to either limit losses or protect gains. 

A stop-limit order involves setting the predefined trigger price to execute the stop out of the position, and an order price at which to execute the order as a limit order. There is, however, no guarantee this limit order will fill in a fast-moving market. This order can be used in a situation where if the price of a cryptocurrency has fallen below the limit price, the trader is willing to wait for the limit order to be filled which may require the price to rise back to the limit price. 

A stop-market order involves setting a predefined trigger price to execute the stop out of the position, and the order is executed at the market price. The benefit of this is the trader is stopped out of their position immediately, without having to worry about the order being filled.  

Take-Profit Order

A take-profit (T/P) order sets a price target at which to execute the closing of an open position. It is a type of limit order that specifies an exact price at which to close the open position for profit to end the trade. If the underlying asset price does not reach the specified limit price for this order, the take-profit order will not execute or fill, leaving the trade open.

Trailing Stop Order

A trailing stop order sets a stop order (stop-market or stop-limit) that trails the current market price, and upon the order being hit by the price, the order executes a closing of an open position and can be used to lock in profit if the trade was already in profit at the time of the order being executed.

Trailing stop orders can be used by traders to protect gains by enabling a trade to remain open and “run” as long as the price keeps moving in the trader’s favor. The amount of the trailing stop can be specified in either percentage terms or absolute terms. 

Time in Force (TIF) Order

Other types of advanced order types include conditional time in force orders, such as good ‘til canceled orders (GTC), immediate or cancel orders (IOC) and fill or kill orders (FOK). 

GTC orders remain active until either the order is filled or the investor cancels it. Different exchanges may limit the maximum time a trader can keep a GTC order open and active to 90 days, or also allow for a trader to specify keeping the order active for only the current day or session. 

GTC orders can help a trader cut down on the day-to-day management of their portfolio. 

IOC orders are orders that are specified to be executed immediately. Any portion of an IOC order that cannot be filled immediately is canceled. IOC orders only require a partial fill and may be designated as limit or market orders. Investors or traders may use IOC orders when markets are volatile to try to fill as much of an order as possible at current market prices.

FOK orders must be filled in their entirety immediately or else be canceled (killed). A FOK order may be specified as a market or a limit order. This type of order cannot be partially filled and instead requires the whole order to be filled, unlike IOC orders which can allow for partial fills. 

 


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