If the crypto market were a novel, it would likely start much like Charles Dickens’ David Copperfield: with the words “I am born.” The market has been maturing ever since its birth. But the Hodl strategy, which has been so popular in recent years, is no longer bearing fruit, and so it is wiser to start thinking in a broader sense and turning to new, proactive strategies. In essence, the call to reason under the current market conditions is learning to trade.
The time has come to switch to a completely logical and more profitable evolution of operations on the crypto market: trading and generating liquidity through operations and orders. The sad reality is that most participants on the crypto market do not know how to trade, and the myriad of training opportunities available on the internet are more confusing than useful. The crypto trading market is not that different from the traditional market of stocks and commodities, as the tools present on both are nearly identical. The main instrument generating trade is still the order, which has successfully migrated from conventional markets into the crypto environment.
This is why Xena Exchange seeks to provide the necessary training and education that beginning traders need to start trading on exchanges, create liquidity, make use of their assets, and generate revenue from their holdings through active trading.
To begin the introductory course, we will consider the types of orders relevant for most other exchanges using examples from the Xena Exchange Terminal. The orders themselves are divided into three types by nature of execution.
All these orders have additional opportunities inherent to them that are intended to limit risks and automatically complete transactions. Stop-loss orders help minimize risks during a price drop and try to reduce losses to zero. As for making profits, professional traders use the take-profit order type.
Stop Loss First And Then Take Profit
Stop-loss and take-profit orders are pending orders that are triggered when the asset’s price passes certain levels. By placing such orders, traders limit the size of their profits and losses. Pre-set stop-loss and take-profit levels allow traders to complete transactions automatically without having to constantly monitor the exchange rate graphs that most novice traders find utterly incomprehensible.
The most reliable levels for stop-loss orders for long positions are strong support levels. The order is placed a bit below the level. If the price drops below this level, a down trend is likely to start. The stop-loss feature will close the position automatically, not allowing the loss to grow uncontrollably. Take-profit orders for long positions may be put a bit below the resistance levels, as the price can start falling after reaching the resistance levels. Take-profit orders will close the position automatically in this case, fixing the profit close to its maximum. For short positions, the rules are the opposite: Put the stop-loss limit a bit higher than the resistance level and the take-profit limit a bit higher than the support. Some traders place such orders below or above the moving average lines (MACD index). Most exchanges present these levels on their charts. For intraday trading, there is often an option for setting a “short” stop-loss, which is when an order is placed at the minimum of the previous candle.
There is also a convenient tool called the PNL (profit and loss) ratio, which is the ratio of profit to loss. It helps traders automatically calculate the level at which to set the take-profit limit depending on the desired result.
Trailing Stop Loss
A trailing stop-loss order is a type of stop-loss order available on Xena Exchange. If you use this type of order, its price will change to maintain a constant distance from the current market price. Trailing stop-loss orders allow traders to minimize risks when the price moves in the direction of the forecast they have made. If the price starts falling, trailing stop-loss orders don’t move.
For instance, let’s say we set 3% as the stop level, which corresponds to $3,298 for BTC with a base price of $3,400. Now the trailing stop will always be kept at a distance of 3% from the current price as the market grows. In this case, the opening position was at $3,400, and the closing position was at $3,798.
Attempt Zero Loss
An attempt zero loss order is another kind of stop-loss order. The difference is that the price of an attempt zero loss order will not move beyond the entry price (the price at which the position was opened).
When the price reaches $3,400, the stop-loss order stops changing. In this case, the trailing stop-loss order seems much more attractive, but this is not always the case.
If a trader, for example, seeks to close a position at a specific price and sets the take-profit level at, for example, $4,000, a trailing stop-loss order can lead to a premature closing of the position.
In this case, the trailing stop-loss order was closed prematurely at a price of $3,648, while with an attempt zero loss order, it would have been possible to close the transaction at the desired price.
Orders differ by their time in force as well. IOC (Immediate or Canceled)and FOK (Fill or Kill) orders are executed instantly. The main difference is that IOC orders support partial order execution, while FOK orders do not.
If a trader buys BTC for a price of $3,400 and places an IOC order for the purchase of 1 BTC at this price that is filled by half, the second part of the order will be canceled automatically. If this were an FOK order, it would be either executed entirely or canceled completely.
Orders on Xena Exchange
The Xena Exchange team has taken into account the wishes of traders and has integrated into its system support for all types of orders, including market, limit and stop orders, trailing stop-loss orders, attempt zero loss orders, FOK, and IOC. Now traders can use a wide variety of tools to conduct effective trading operations. To make things more interesting, Xena Exchange is launching derivative contracts with BTC/USD on February 18 and GRAM/USD, which will be the first perpetual for the GRAM token, on February 27.
In addition to the above types of orders, Xena Exchange has implemented some powerful proprietary studies that provide buy or sell signals for particular assets. More information on how to use these will be available in the upcoming articles.
Mastering trading is something that virtually every participant of the crypto market has to undertake, given that waiting for miracles is off the table. The instruments are all there, and so is the knowledge base necessary to start working on the market. It is necessary to take precautions and be mindful of the risks associated when trading, but with enough experience and the right trading platform, it is possible to start earning serious money on the crypto assets available. A dollar here and a few cents there is the principle by which traders work, and if taken in aggregate over a period of time, such small daily victories will amount to a hefty sum of profit.