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Order definition

What is an order?

Orders are used by investors to tell the cryptoplatform when – and how – to buy or sell assets. These instructions are usually made online or by phone.

Types of orders

Orders can be split into several categories. They include:

  • Market orders

Investors use these orders when they want to buy or sell an asset  immediately. When cryptoplatform receives this instruction, it will execute the trade at the current market rate. Although this order guarantees that a transaction will take place, it doesn’t guarantee the price, as a share’s value may have fluctuated by the time of execution.

  • Stop orders

These orders are used when a trader wants to buy or sell  an asset when the price reaches a pre-determined level. As soon as this milestone is reached, a market order is implemented so the trade is executed straight away. When used correctly, it can help traders to limit their losses.

  • Limit orders

If a buyer only wants to acquire an asset when a price is at a set level or lower, or a seller wants to sell an asset as soon as the price hit a peak, limit orders can be used. They help ensure that traders never pay more for an asset than planned, and lock in profits when share prices grow.

Things to remember

Whereas market orders are guaranteed to take place, limit orders are not. As an example, let’s imagine  that tokenised shares in a gas company are currently trading at $100 at the cryptoplatform. A trader can put in a limit order specifying to cryptoplatform that he would be willing to purchase 50  tokenised shares if prices reach $70 or lower. Meanwhile, another trader can put in an order stating that he will sell his tokenised shares if their value exceeds $130 a piece. If prices stay constant, these orders will never be fulfilled.

Some orders remain in place indefinitely until the requirements for execution are satisfied, while others will only be in force for the duration of the trading day.