How To Use Order Types On Binance Exchange
What Is Market Order?
A market order is an order to quickly buy or sell at the best available current price. It needs liquidity to be filled, meaning that it is executed based on the limit orders that were previously placed on the order book.
Unlike limit orders, where orders are placed on the order book, market orders are executed instantly at the current market price, meaning that you pay the fees as a market taker.
How To Use It?
Example: You want to create a market order to buy 2 Binance Coins (BNB). After login in to your Binance account, choose the BNB market you want (e.g., BNB/USDT) and go to the trading page. Then, choose the Market order tab, set the amount to 2 BNB, and click the ‘Buy BNB’ button. (Sell BNB is the same as Buy BNB)
After that, you will see a confirmation message on the screen, and your market order will be executed.
Since market orders are executed right away, your market buy order will match the cheapest limit sell order available on the order book, in this example 2 BNB for 5.2052 USDT each.
But if You want to buy 500 BNB at the current market price. The cheapest limit sell order available will not be sufficient to fill your entire market buy order, so your order will automatically match the following limit sell orders, working its way up the order book until it is completed. This is called slippage and is the reason why you pay higher prices and higher fees (because you are acting as a market taker).
When Should You Use It?
Market orders are handy in situations where getting your order filled is more important than getting a certain price. This means that you should only use market orders if you are willing to pay higher prices and fees caused by the slippage. In other words, market orders should only be used if you are in a rush.
Sometimes you might be in a situation where you had a stop-limit order that was passed over, and you need to buy/sell as soon as possible. So if you need to get into a trade right away or get yourself out of trouble, that’s when market orders come in handy.
However, if you’re just coming into crypto for the first time and you are using Bitcoin to buy some altcoins, avoid using market orders because you will be paying way more than you should. In this case, you should use limit orders.
What Is Limit Order?
A limit order is an order that you place on the order book with a specific limit price. The limit price is determined by you. So when you place a limit order, the trade will only be executed if the market price reaches your limit price (or better). Therefore, you may use limit orders to buy at a lower price or to sell at a higher price than the current market price.
Unlike market orders, where trades are executed instantly at the current market price, limit orders are placed on the order book and are not executed immediately, meaning that you save on fees as a market maker.
How to use it?
Example: You want to sell BNB at a higher price than what is currently being bid. After logging in to your Binance account, choose the BNB market you want (e.g., BNB/BTC) and go to the trading page. Then, choose the Limit order tab, set the price and amount, and click the ‘Sell BNB’ button. You may also set the amount by clicking the percentage buttons, so you can easily place a limit sell order for 25%, 50%, 75% or 100% of your balance. (Buy BNB is the same as Sell BNB)
After that, you will see a confirmation message on the screen, and your limit order will be placed on the order book, with a small yellow arrow.
You can scroll down to see and manage your open orders. The limit order will only execute if the market price reaches your limit price. If the market price doesn’t reach the price you set, the limit order will remain open.
When Should You Use It?
You should use limit orders when you are not in a rush to buy or sell. Unlike market orders, the limit orders are not executed instantly, so you need to wait until your ask/bid price is reached. Limit orders allow you to get better selling and buying prices and they are usually placed on major support and resistance levels. You may also split your buy/sell order into many smaller limit orders, so you get a cost average effect
What Is Stop-Limit Order?
A stop-limit order is one of the three order types that you will find on Binance. The best way to understand a stop-limit order is to break it down into stop price and limit price. The stop price is simply the price that triggers a limit order, and the limit price is the specific price of the limit order that was triggered. This means that once your stop price has been reached, your limit order will be immediately placed on the order book.
Although the stop and limit prices can be the same, this is not a requirement. In fact, it would be safer for you to set the stop price (trigger price) a bit higher than the limit price (for sell orders) or a bit lower than the limit price (for buy orders). This increases the chances of your limit order getting filled after the stop-limit is triggered.
How To Use It?
Example: You just bought 5 BNB at 0.0012761 BTC because you believe the price is close to a major support level and will likely go up from here.
In this situation, you may want to set a stop-limit sell order to alleviate your losses in case your assumption is wrong, and the price starts to drop. To do that, log in to your Binance account and go to the BNB/BTC market. Then click on the Stop-Limit tab and set the stop and limit price, along with the amount of BNB to be sold.
So if you believe that 0.0012700 BTC is a reliable support level, you may set a stop-limit order just below this price (in case it doesn’t hold). In this example, we will set a stop-limit order for 5 BNB with the stop price at 0.0012490 BTC and the limit price at 0.0012440 BTC.
When You click ‘Sell BNB’ button, a confirmation window will appear. Make sure everything is correct and press Place Order to confirm.
After placing your stop-limit order, you will see a confirmation message.
You can scroll down to see and manage your open orders.
Note that the stop-limit order will only be placed if and when the stop price is reached, and the limit order will only be filled if the market price reaches your limit price. If your limit-order is triggered (by the stop price), but the market price doesn’t reach the price you set, the limit order will remain open.
Sometimes you might be in a situation where the price drops too fast, and your stop-limit order is passed over without being filled. In this case, you may appeal to market orders to quickly get out of the trade.
When Should You Use It?
Stop-limit orders are valuable as a risk management tool, and you should use it to avoid significant losses. Noteworthy, they are also useful for placing Sell orders to ensure that you take your profits when your trading targets are reached. You may also set a stop-limit buy order to buy an asset after a certain resistance level is breached during the start of an uptrend.
What Is OCO Order?
An OCO, or “One Cancels the Other” order allows you to place two orders at the same time. It combines a limit order, with a stop-limit order, but only one of the two can be executed.
In other words, as soon as one of the orders get partially or fully filled, the remaining one will be canceled automatically. Note that canceling one of the orders will also cancel the other one.
When trading on the Binance Exchange, you can use OCO orders as a basic form of trade automation. This feature gives you the option of placing two limit orders simultaneously, which may come handy for taking profit and minimizing potential losses.
How To Use It?
After logging in to your Binance account, go to the Basic Exchange interface and find the trading area as illustrated below. Click on “Stop-limit order” to open a dropdown menu and select “OCO.”
On Binance, OCO orders can be placed as a pair of buying or selling orders. You can find more information about OCO orders by clicking on the question mark.
After selecting the OCO option, a new trading interface will be loaded, as shown below. This interface allows you to set a limit and a stop-limit order simultaneously.
Price: The price of your limit order. This order will be visible on the order book.
- Stop: The price at which your stop-limit order will be triggered (e.g., 0.0024950 BTC).
Limit: The actual price of your limit order after the stop is triggered (e.g., 0.0024900 BTC).
- Amount: The size of your order (e.g., 5 BNB).
- Total: The total value of your order.
As an example, let’s suppose that you just bought 5 BNB at 0.0026837 BTC because you believe the price is close to a major support zone and will presumably go up.
In this case, you can use the OCO feature to place a profit-taking order at 0.0030 BTC along with a stop-limit order at 0.0024900 BTC.
If your prediction is correct and price rises to or above 0.0030 BTC, your sell order will be executed, and the stop-limit order will be automatically canceled.
On the other hand, if you end up being wrong and the price drops to 0.0024950 BTC, your stop-limit order would be triggered. This would potentially minimize your losses, in case the price drops even more.
Note that in this example, the Stop Price is 0.0024950 (trigger price) and the Limit Price is 0.0024900 (the trading price of your order). This means that your stop-limit order would be triggered at the moment the 0.0024950 mark is reached. But, the actual trading price of your order would be 0.0024900. Put in another way, if BNB/BTC drops to or below 0.0024950, a limit sell order at 0.0024900 will be placed.
After placing your OCO order, you can scroll down to visualize the details of both orders on the “Open Orders” section.
When Should You Use It?
The OCO feature is a simple but powerful tool, which allows you and other Binance users to trade in a more secure and versatile way. This special type of order can be useful for locking profits, limiting risks, and even for entering and exiting positions.
How To Use Order Types On Binance Exchange – Source: https://www.binance.com