What is an Index Order?

What Is an Index Order?

What is an Index Order?

The index order leverages a smart algorithm BTSE uses that splices your order into the market and aims to achieve the best execution at fair market prices. The trader can specify the max acceptable percentage deviation they are willing to accept for the order from the coin price index. The maximum percentage value allowed is +/-10%. 

The index order can be used to execute a large order in which the price may track a certain percentage above or below the BTSE BTC index price to allow the algorithm to deliver better fills. 

If a positive value is entered for the percentage, the effective price of the order would be that percentage above the BTC index price. Entering a negative value would see the effective price land that percentage below the BTC index price. 

The trader will specify their maximum and minimum prices for this order. That means for a buy order, if the maximum price is $4,000 and the current BTC index price is at $3,900, then the trader’s order will be $3,900. If the maximum price is $4,000 and the BTC index is $4,100, then the order will remain at $4,000. The minimum price would be the opposite of the maximum price – the same applies to a sell order. 

The trader will also need to specify the number of contracts they want to purchase for using index orders on the futures market, or the size desired if using index orders on the spot market. 

BTSE also offers “Stealth Mode” for index orders, a function that enables a trader to buy or sell a percentage of the user’s digital currencies one at a time. For example, if a user wants to buy or sell 10 BTC and chooses 10% stealth mode, the trading system will buy/sell 1 BTC at a time, 10 times.

What Are the Advantages and Disadvantages?

The advantage of an index order is that a trader can place an order without having to check the order book manually for the best prices to potentially fill the order and allow BTSE’s smart algorithm to do that as part of the order execution process. It also enables the trader to set the maximum percentage deviation from the current market price that they are willing to accept for the execution. 

This way, the algorithm may be able to obtain better or more advantageous fills at a faster pace. 

Another advantage is that by using the “stealth mode” option, the algorithm may split the execution of the order in a way that is hidden from being seen in the order book.

 


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Note: BTSE Blog contents are intended solely to provide varying insights and perspectives. Unless otherwise noted, they do not represent the views of BTSE and should in no way be treated as investment advice. Markets are volatile, and trading brings rewards and risks. Trade with caution.

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