Spot Trading Stategies
1. Market Orders
In simple terms, a market order is a method for you to trade your digital assets based on the current market's fair price. This means buying or selling a particular trading pair. On the order book, you can see the buy and sell orders placed by traders. The MEXC platform will match the buy and sell orders based on real-time trading conditions.
Example:
If you place a market order to buy MX, your order will be executed at the best available buy price at that moment. Similarly, if you place a market order to sell MX, your order will be executed at the best available sell price at that moment.
1. The Advantages of Market Orders
- Simple and convenient with no need to set a price in advance. This is the most convenient way to place spot orders.
- A market order is useful when traders want to quickly close a position or buy a certain asset with the entire position.
- A market order is often the fastest way to trade. The MEXC platform uses its trading system to swiftly match buy and sell orders and complete the trades.
2. The Limitations of Market Orders
- When the market price is highly volatile or the trading volume liquidity of the purchased asset is low, market orders may not be executed at the best available price and can result in slippage.
- Additionally, market orders may not be available in certain trading scenarios, such as before the market opens.
2. Limit Order
1. The Advantages of Limit Orders
- To a certain extent, trading with limit orders can overcome the issue of slippage because the MEXC trading system will only execute trades at the specified price.
- Trading with limit orders is a more cautious trading strategy that helps regulate trades more effectively.
2. The Limitations of Limit Orders
- Trading with limit orders requires considering the current liquidity of the market. If the liquidity is insufficient to fulfill the order quantity, only a portion of the assets will be traded. In such cases, it is not suitable for the purpose of quick closing or opening positions.
- Additionally, if the market does not move in the desired direction continuously, limit orders may remain unfilled.
3. Stop Limit Orders
Put simply, stop limit orders combine the features of limit orders and TP/SL orders. Therefore:
- On one hand, traders can use stop limit orders to buy digital assets at a desired price.
- On the other hand, traders holding specific digital assets can control their potential profit or loss on those assets.
If you want to buy 100 MX, you can place an order using the [Limit] option, where you set the desired purchase price to complete the order. Alternatively, you can use the [Stop Limit] option. First, you set the [Trigger Price], and then you set the purchase [Price]. With the latter option, the trade will only be executed when the asset reaches the [Trigger Price] and the price subsequently reaches the purchase [Price] again.
Similarly, if you want to sell 100 MX, you can place an order using the [Limit] option, where you set the desired sale price to complete the order. Alternatively, you can use the [Stop Limit] option. First, you set the [Trigger Price], and then you set the sale [Price]. With the latter option, the trade will only be executed when the asset reaches the [Trigger Price] and the price subsequently reaches the sale [Price] again.
- If the price set in the [Limit] order is less favorable than the best market price, the order will still be executed at the best market price.
- The most obvious difference between [Stop Limit] orders and [Limit] orders is the addition of a [Trigger Price] setting. This is done to avoid false signals in price trends and prevent traders from executing [TP/SL] orders at unfavorable prices.
MEXC
July 5, 2023