Trading in the spot market is all about buying and selling. There are different types of spot market orders, and they function differently.

Allowing you to buy and sell more easily without constantly monitoring the asset that you're trading.

When trading a highly volatile asset you may be affected by slippage risk if you use the traditional buy and sell spot market orders

And what’s slippage?

The term slippage refers to the difference between the price you expect an asset to trade for and the price at which it is traded, which is most commonly seen in volatile markets.

The types of Spot market orders and their functions will be discussed, along with how they can prevent slippage.

Market Order

A market order is an order to buy or sell an asset at the current market price. This type of order is prone to high slippage risk because the market determines the price at which the order will be filled.

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Example. An instant order to buy 1 BTC at the current market price which may vary especially in a highly volatile market. 

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Limit Order

The limit order is a type of market order in which you determine the price at which the order will be executed. A limit order is filled when the price falls within its range.

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Example: An order to buy 1 BTC at $23,000, which means at $23,000 your order to buy 1 BTC will be filled.

Stop-limit Order

A stop-limit order is a type of order where you pre-set trigger price, and get the system to place an order for you in your absence.

In this type of order, when the trigger price you set is reached, the system will automatically place an order at the limit price, and order size pre-set by you.

Example: An order to sell 1 BTC at a price of $23,000 (limit price) in the order book if the price of  BTC crosses $23,100 (stop price)

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Trailing Stop Order

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A trailing order is a type of market order that helps you to lock in profit, and reduce your losses in the market as the trade is moving in your favor.
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Example: Say you bought 1 BTC at $23,000, and you put a stop loss order at $22,500 and stop limit at $8.5

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Conclusion

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Orders are used to trade crypto on an exchange. These orders are simple accords that allow you to specify which crypto you want to purchase, how much of it, and for what price. Alternatively, you can enter what you want to sell and the conditions under which you are willing to sell it.

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