Placing Different Types of Futures Orders
#Futures
MEXC offers futures traders five kinds of orders: limit orders, market orders, trigger orders, trailing stop orders, and post-only orders. Each type of order comes with distinct features. Traders can choose different order methods based on their individual preferences and trading objectives.
1. Limit Orders
1.1 Definition
A limit order refers to an order to buy or sell at a specific price. It allows users to set the order price, and the order will be executed at the designated price or a more favorable one.
When placing a limit order, if there are existing orders in the order book that match or surpass the specified order price, the limit order will be immediately executed at the best price available. In the absence of orders in the book meeting or exceeding the specified price, the limit order will be added to the book, awaiting execution, thereby enhancing market depth.
1.2 Pros and Cons
Advantages of Limit Orders: Ensures execution at the specified price or better.
Disadvantages of Limit Orders: May involve a waiting period for matching and execution, with no assurance that the limit order will be executed.
1.3 Use Cases
Limit orders are typically suitable for users who want to buy or sell at a specific fixed price. The following are two common scenarios for using limit orders.
Scenario 1: A is a futures trader, and the current perpetual futures price for BTC is 40,000 USDT. If A aims to buy at 39,000 USDT, opting for a limit order allows execution when the price falls to or below 39,000 USDT.
Scenario 2: The current perpetual futures price for BTC is 40,000 USDT. A can opt for a limit order if they intend to sell at 41,000 USDT. The limit order will be triggered and executed when the price reaches or surpasses 41,000 USDT.
1.4 Three Effective Timeframes
When using a limit order, it's important to note that there are three effective timeframes: GTC (Good 'til Cancelled), IOC (Immediate or Cancel), and FOK (Fill or Kill).
GTC (Good 'til Cancelled): This order remains active until fully executed or canceled.
IOC (Immediate or Cancel): If this order cannot be immediately executed at the specified price, the unfilled portion is canceled.
FOK (Fill or Kill): If this order cannot be fully executed immediately, it is entirely canceled.
1.5 Set Up
Website
Navigate to the futures trading page. Select [Limit], input the "Price" and "Quantity," then click either [Open Long] or [Open Short.]
App
Access the futures trading page. Choose [Limit], input the Price and "Amount," then click either [Open Long] or [Open Short].
2. Market Orders
2.1 Definition
A market order is a type of order that involves rapid buying or selling at the best available market price.
2.2 Pros and Cons
Advantages of Market Orders: Users do not need to set the price themselves, allowing for fast order execution.
Disadvantages of Market Orders: Although market orders ensure rapid order execution, they cannot ensure the execution price due to potential rapid market fluctuations. This may lead to deviations from the expected execution price. To address such situations, users can enable the price protection feature. MEXC's price protection feature is designed to prevent abnormal triggering of take-profit and stop-loss orders in periods of intense market volatility, thereby reducing potential losses.
2.3 Use Cases
Market orders are generally suitable for quickly buying or selling at the current market price. The following are two common scenarios where market orders are often used.
Scenario One: When BTC's perpetual futures price rapidly rises above 40,000 USDT and A wants to make an immediate purchase at the prevailing market rate, they can opt for a market order to swiftly facilitate the transaction.
Scenario Two: The current BTC perpetual futures price precipitously drops below 39,000 USDT and A wants to sell quickly. They are willing to execute at the BTC perpetual futures market price for immediacy, so they can opt for a market order to facilitate the sale.
2.4 Set Up
Website
Open the futures trading page, select [Market], input the quantity, and click [Open Long] or [Open Short].
App
Go to the futures trading page, choose [Market], input the quantity, and click [Open Long] or [Open Short].
3. Trigger Orders
3.1 Definition
Users can pre-set the trigger price, price, and quantity. Once the market price reaches the trigger price, the system will automatically execute an order at the specified price. There is no freezing of positions or margin until the trigger order is successfully triggered.
3.2 Pros and Cons
Advantages of Trigger Orders: It reduces the time spent monitoring the market during trading, allowing users to plan buy and sell points in advance, thus helping secure profits or minimize losses in trades.
Disadvantages of Trigger Orders: There is no guarantee that a trigger order will be successfully triggered. It may fail to execute due to reasons such as position limits or insufficient margin.
3.3 Use Cases
Trigger orders are typically used to set entry or exit prices in advance. Here are two common scenarios for using trigger orders.
Scenario One: A wants to set a stop-loss for an exit. While holding a long position in the BTC perpetual futures with an opening average price of 40,000 USDT, A spots a support level near 39,000 USDT. Concerned that a breach of this support could lead to further declines, they opt to set a stop-loss at 39,000 USDT for this order. A configures the "Trigger Price" as 39,000 USDT and the "Price" as either the market price of 39,000 USDT or a price below 39,000 USDT. If the price drops to 39,000 USDT, the stop-loss is activated, initiating an order to close the long position at 39,000 USDT.
Scenario Two: Janice wants to enter a long position. With the current market price of the BTC contract at 39,000 USDT, Janice believes that if the price surges above 40,000 USDT, there will be a significant bullish trend. In this case, she can use a planned order to go long, setting the "Trigger Price" at 40,000 USDT and the "Price" as either the market price of 40,000 USDT or a price above 40,000 USDT. If the price rises to 40,000 USDT, the planned order is triggered, executing a market order to go long.
3.4 Three Price Types
When using a Trigger Order, it is important to note the three types of trigger prices: Last Price, Fair Price, and Index Price.
Last Price: Refers to the real-time executed price in the MEXC futures trading order book.
Fair Price: The fair price is a mechanism introduced to prevent losses for MEXCers caused by abnormal market fluctuations on individual platforms. It is calculated by weighting price data from major exchanges, providing a fairer reflection of the real market price.
Index Price: MEXC selects prices from multiple mainstream exchange spot markets, assigning different weights to each component and calculating the index price accordingly.
3.5 Set Up
Website
Access the futures page, choose [Trigger], input the "Trigger Price," "Price," and "Quantity," then click [Open Long] or [Open Short].
App
Access the futures page, select [Trigger], enter the "Trigger Price," "Price," and "Quantity," then click [Open Long] or [Open Short].
4. Trailing Stop Orders
4.1 Definition
A Trailing Stop Order is a strategic order that submits the trader's pre-set order to the market in the event of a pullback in the market. When the futures market price satisfies the user-defined activation conditions and trail variance, the order is triggered.
Specific trigger price calculations:
For selling, the actual trigger price = All-Time High (ATH) - Trail Variance (price distance) or ATH * (1 - Trail Variance%) (ratio).
For buying, the actual trigger price = All-Time Low (ATL) + Trail Variance or ATL * (1 + Trail Variance%).
Likewise, users can choose the activation price for the order. The activation price serves as the triggering condition for the trailing stop order. Once the price of the specified type reaches or surpasses the activation price, the order becomes active. It is only after activation that the system begins the calculation of the actual trigger price. If the activation price is left blank, the order becomes active right after placement. The activation price for the trailing stop order is further categorized into the last price, fair price, and index price.
4.2 Pros and Cons
Advantages of Trailing Stop Orders: Control over profit modes and reproducibility in trading strategies.
Disadvantages of Trailing Stop Orders: Difficulty in setting the trail variance due to significant volatility in the cryptocurrency market.
4.3 Use Cases
Trailing stop orders are commonly used for purchasing during a rebound from a low point or selling during a pullback after reaching a peak. The following are two examples of scenarios illustrating the application of trailing stop orders.
Scenario 1: A engages in a rebound purchase. If the BTC perpetual futures's current market price falls to 39,000 USDT, A anticipates a continued market decline, but they foresee a potential rebound around 37,000 USDT. Planning to buy a specific quantity when the rebound reaches 1%, A sets the activation price for the trailing stop order at 37,000 USDT, with a trail variance of 1%. The order direction is configured as a buy to open a long position in the trailing stop order.
Scenario 2: A opts to sell during a pullback after the market reaches its peak. If the current market price of the BTC perpetual contract rises to 40,000 USDT, A anticipates a sustained market increase, but they expect a potential pullback around 42,000 USDT. Planning to sell a specific quantity when the pullback reaches 1%, A sets the activation price for the trailing stop order strategy at 42,000 USDT, with a trail variance of 1%. The order direction is configured as a sell to open a short position in the trailing stop order.
4.4 Set Up
Website
Enter the futures page. Choose [Trailing Stop] - enter "Trail Variance" and "Quantity" - click [Open Long] or [Open Short].
App
Enter the futures page, choose [Trailing Stop] - enter "Ratio" and "Amount" - click [Open Long] or [Open Short].
5. Post Only
5.1 Definition
Post Only means that the order will not be immediately matched in the market, ensuring that the user remains a maker. If the order results in an immediate match with an existing order, it is automatically canceled.
A maker is someone who places a limit order, specifying its price and quantity, waiting for other users to match with it. Makers add liquidity to the market. On the other hand, a taker is someone who actively matches with existing limit or market orders, consuming market liquidity.
5.2 Pros and Cons
Advantages of Post Only: In MEXC futures trading, the transaction fee rate for maker orders is significantly lower than for taker orders. Exclusively using Post Only ensures that you benefit from a 0% transaction fee.
Disadvantages of Post Only: As it involves placing orders without actively taking existing orders, there is no guarantee of immediate execution.
5.3 Use Cases
Post Only orders are typically used as a means for liquidity providers to earn fee income. The following are two scenarios where using Post Only orders is common.
Scenario 1: Assume A holds a positive view on the BTC price, with the current market order price at 40,000 USDT. If A sets the buy price at 39,000 USDT, below the current price of 40,000 USDT, the order won't be executed immediately. In this scenario, A's order is successfully placed, designating A as a Maker. However, if A sets the buy price at 41,000 USDT, exceeding the current price of 40,000 USDT, the order will be promptly canceled, ensuring A retains Maker status.
Scenario Two: Assume A is bearish on the BTC price. The prevailing market order price for BTC is 40,000 USDT. Should A set the sell price at 41,000 USDT, surpassing the current 40,000 USDT, the order won't be executed right away. In this case, A's order is successfully placed, designating A as a Maker. However, if A sets the sell price at 39,000 USDT, falling below the current 40,000 USDT, the order will be promptly canceled, ensuring A retains the Maker status.
5.4 Set Up
Website
Enter the futures page, select [Post Only] - enter "Price" and "Quantity" - click "Long" or "Short".
App
Enter the futures page, select [Post Only] - enter "Price" and "Amount" - click [Open Long] or [Open Short].
The information above covers the definitions, pros and cons, usage scenarios, and specific procedures for the five order modes in MEXC contract trading. Depending on your specific needs, you can choose the most suitable order type. Feel free to give it a try!
Disclaimer: This information does not provide advice on investment, taxation, legal, financial, accounting, or any other related services, nor does it constitute advice to purchase, sell, or hold any assets. MEXC Learn provides information for reference purposes only and does not constitute investment advice. Please ensure you fully understand the risks involved and exercise caution when investing. The platform is not responsible for users' investment decisions.