Introduction

The three ordering methods supported by Gate.io futures are limited, market, and trigger orders, suited to their own purpose. In light of this, the following aims in providing a deeper understanding of the three types.

Limited Order

What is Limited Order?

A limit order (Maker) is an order where you are able to set the specific buy or sell price. In other words, you can decide the maximum or minimum price you are willing to buy or sell. After placing the order, it will be placed in the order book and will only be executed if the market price reaches or is higher than this limit price. Limited orders are automatically executed, which means you don’t have to actively watch the market all the time or worry about missing a buy or sell opportunity while you sleep.

However, the execution of a limited order cannot be guaranteed. If the market price is consistently below your sell limit or above your buy limit, your trade will always remain open in the order book.

Let’s look at a specific example of the limited order:

For example, if the current price is 20000 (A), and a limit buy order with an order price of 15000 (C) is placed, then the order will not be filled until the price falls to 15000 (C) or below. However, if the order price of the buy order is placed as 25000 (B) or higher than the current market price, then the buy order will be filled immediately.

Optimum Application Scenarios

The following three situations are more suitable for using limit orders:

1. when you want to buy at a specific price lower than the current market price, or sell at a specific price higher than the current market price;
2. when you are not rushing to buy or sell immediately;
3. and when you want to lock in unrealized profits or minimize potential losses.

Market Order

What is a market order?

Market order (Taker) is executed immediately at the current best available price. It is based on the limited orders already placed in the order book. This means that you cannot be 100% sure of getting the price you want. And a sliding price gap occurs when the transaction price does not match the expected price.

Examples

If the current price is 19000, the next market order will be executed directly according to the counterparty price, but the average transaction price may not be 19000.

For market buy orders, the average transaction price will be slightly higher than the current price; and for market sell orders, the average transaction price will be slightly lower than the current price.

Advantages of the market orders

The advantages of market orders mainly lie in the following aspects:

• easy to understand. If you are trading a liquid high market cap token such as Bitcoin or Ethereum, the market order enjoys high security;
• all assets can be purchased and sold according to individual wishes. If you need to close or open a position as soon as possible, a market order must be the optimal choice;
• supporting instant transactions. For example, when the market is about to close, the time to execute a trade may be very tight, then placing a market order is always the quickest way to execute a trade.

Trigger Order

What is trigger order?

Trigger Order means that when the market transaction price reaches the trigger conditions, the system will place orders according to the pre-set price and quantity set in advance. The trigger price can be the latest market price or the marked price.

Examples

If the current price is 20000 (A), the trigger price of the planned order can be set to 25000 (B), which is higher than the current price; it can also be set to 19000 (C), which is lower than the current price.

For a trigger order, when the price reaches B2, the buy order will be activated, and will be executed at the placed [Limited Price] or [Market Price];

When the price reaches C2, the sell order will be activated and will be executed at the placed [Limited Price] or [Market Price].

Advantages of a Trigger Order

1. Traders can make trading plans in advance based on support and resistance levels.
2. When the price falls below the support level, traders can place a trigger order to take profit and stop loss, lock in profits or cut off losses;
3. When the price breaks through the resistance level, traders can place a trigger order to open or add positions to facilitate better position management.

Summary

Order types are commonly used in futures transactions. In order to be able to trade properly, all users should have good grasp of the application of limited price, market price, and trigger order in actual transactions.

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Disclaimer

This is for your reference only. The information provided by Gate.io above is not investment advice and is not responsible for any investment you may make. The information regarding technical analysis, market judgments, trading tips, and trader sharing may involve potential risks, investment variables, and uncertainties, and this issue does not provide or imply any opportunity for guaranteed returns.