Limit orders and stop orders: trading on Young Platform Pro
March 28, 2023
Theoretically, there are 3 types of orders in trading: market orders, limit orders and stop orders. However, when you actually practise trading, you usually talk in terms of buy limit and buy stop orders to open a position in the market, and stop loss and take profit to close it and liquidate the position. Let’s see how to set these three orders on Young Platform Pro with concrete examples.
Young Platform Pro: crypto trading
In addition to the Young Platform app to buy and sell crypto easily, there is also a professional version for traders, available from desktop on the web: Young Platform Pro.
The platform allows you to do technical analysis on price charts thanks to the integration of TradingView, to consult the order book updated in real time and to set advanced trading orders: limit orders and stop orders. But let’s see how the classic market order also works on this exchange.
Market Orders on Young Platform Pro
Unlike limit orders and stop orders, the market order is executed immediately after being opened. The market order in fact fetches from the order book the first available sale price (Best ASK) to complete your buy order. Conversely, it fetches the first available buy order (Best BID) to complete your sell order.
Here are two examples on the SOL/EUR pair:
1. Let’s say I want to buy 10€ of Solana (SOL). In this case, my market order will complete the sell orders, starting with the cheapest, i.e. the Best ASK (A). Remember that these asks are nothing more than limit orders waiting to be matched by a buyer.
In this case, the quantity I want to buy matches perfectly with the quantity sold in the Best ASK, so my order will simply complete it. The Ask will then be removed from the order book and I will get 1 SOL.
2. Let’s assume that I want to buy 100€ of SOL. The Best ASK is not enough.
So my buy order will complete all sell orders starting with A and continuing with B, C and D until I use up all 100€ to get SOL.
My 100€ order will therefore complete A, B, C and part of D, taking 15€ out of 33€ and still leaving 18€ in the order book.
100€ = A (10€) + B (15€) + C (60€) + D (15€)
Orders that are executed after mine will start from what remains of D, while A, B, C and part of D will disappear from the order book and will be filed in the Trade History.
The same mechanism happens when I want to sell. My sell market order will draw from the first buy order (best BID) going down to lower and lower prices.
Limit Orders on Young Platform Pro
Limit orders allow you to set a price in advance at which you want to buy or sell, and have the trade execute itself if this price is actually reached by the market.
To set a limit order on Young Platform, simply go to the order form on the right where you set orders, and next to ‘market’, click on ‘limit’.
Then choose whether to sell or buy, enter the execution price (limit price) and finally the quantity of cryptocurrency.
If you want to buy, remember to set a lower limit price than the current one, and conversely if you want to sell you will have to set a higher limit price than the current one.
To better calculate how much you’ll spend, simply see the total at the bottom and adjust the quantity or price to get the correct expenditure.
On Young Platform Pro, you will also find advanced limit order options. These are a set of execution conditions that you can select to better manage your order.
- Good ‘Til Canceled (GTC): your order will remain active until it is either executed or cancelled. This is the standard option used for limit orders.
- Day Only: your order will only be active until 00.00 UTC.
- Fill or Kill (FOK): the order must be completed in full. Otherwise, it will not be executed at all.
- Immediate or Cancel (IOC): the order is executed immediately at the desired price. If there is not enough quantity at that price, however, it is only partially executed. This is the difference with a market order.
Stop orders on Young Platform Pro
Stop orders, just like limit orders, allow the execution price to be set, however the main difference with limit orders is that they trigger a market order the moment they reach the stop price. So the trade is made at the first available price. Sell stop orders (stop loss) are mainly used to avoid large losses, while buy stop orders are used to avoid missing a possible profit opportunity if resistance lines are broken.
The stop price must be higher than the current price in the case of buying, and lower in the case of selling.
Young Platform Pro provides two types of stop orders:
- Stop Market Order
- Stop Limit Order
The former triggers a market order when the stop price is reached, as per the standard setting.
The stop limit order, on the other hand, allows two prices to be set: the stop price and the limit price.
The stop price is what the cryptocurrency must reach for the order to be triggered.
The limit price indicates how much you are willing to pay for the purchase or the minimum you will receive if you sell.
The order will then be executed in the range between the stop price and the limit price.
You can only create buy orders with prices higher than the market price. The limit price must therefore always be slightly higher than the stop price. Once the stop price is exceeded, in fact, the limit price is the maximum price you are willing to pay.
Conversely, you can only sell at prices lower than the market price. The limit price should be set lower than the stop price, as it indicates the minimum price at which you are willing to sell to protect yourself against further losses.
Once activated, the limit order is executed immediately in the given range, buying or selling at the cheapest price at that moment.
Here is an example of a stop-limit purchase:
My aim in this case is to execute a buy after the resistance is broken. Let’s say it is at €11,060.00, taking the order book image above as an example.
- The market price is 10,901.6€.
- I set the stop price, for example, at €11,060.90
- I set the limit price, for example, at €11,062.20
- The execution price, if reached, will be the cheapest or available between €11,060.90 and 11,062.20€.
If by chance this range is no longer available (e.g. a very large order arrives that manages to complete all the orders in the range I want to enter before my order is executed) the stop limit is cancelled.
On Young Platform you therefore have 3 trading modes at your disposal, of which limit order and stop order also provide advanced options to allow you to set the conditions that best favour your trading strategy.