What Is an Order?
Simply put, an order is an instruction from a trader to buy or sell assets in the market or on BitTap. In plain terms, a trade generated by a user buying or selling is an order. Before understanding order types, we must first understand the concepts of Maker and Taker in trading.
As is well known, the cryptocurrency market consists of makers and takers. Orders created by makers enter the order book rather than being executed immediately. Users will notice that these roles differ, and market activity is sustained through the interaction between makers and takers.
For example, suppose a limit order is created to sell 1 Bitcoin when the price reaches 60,000 USD. Such orders provide liquidity to the market, allowing other traders to buy or sell Bitcoin more easily and immediately when conditions are met. Traders who buy or sell immediately are called takers. In other words, takers are the counterparts who execute the orders created by makers.
To encourage makers to provide liquidity, trading platforms usually charge lower fees to makers.
Order Types
Whether you are trading spot or contracts, market orders, limit orders, and trigger orders are the most common order types.
1. Market Order
The simplest order type in BitTap contract trading is the market order. As the name suggests, a market order is executed immediately at the current market price. Please note that in highly volatile markets, such as the cryptocurrency market, the system will match your order with the best available price it can find, and that price may differ from the price at the moment of execution. If the order is not filled or not fully filled, it will continue to be placed at the latest available tradable price.
2. Limit Order
A limit order is slightly different. Although it is also intended to be executed as soon as possible, it will only be filled at the specified price or a better price. A limit order means placing an order in the order book at a specific limit price, which is determined by the user. The trade will only be executed when the market reaches that limit price, or a more favorable price. Therefore, a limit order allows you to buy at a lower price or sell at a higher price than the current market price. Unlike a market order, which executes immediately at the current market price, a limit order is placed on the order book and does not execute immediately.
For example, suppose you want to buy BTCUSDT perpetual contracts immediately, and the current price is 66,000 USDT. After entering the total amount of USDT you want to spend, the market order will be filled immediately at the best available price. That is a market order.
If you want to buy BTCUSDT perpetual contracts at a better price, you can click limit order and enter the price at which you want to trade, for example 66,000 USDT. The order will be placed in the order book and executed at the price closest to 66,000.
3. Trigger Order
A trigger order refers to an order placed into the market according to the set quantity, execution price, and execution method when the market price reaches the trigger price. Assets are not frozen before the trigger occurs. Please note that due to price and position constraints or other level restrictions, successful execution is not guaranteed.
For example, once the market price reaches the trigger condition, such as 66,000 USDT, a market order will be placed and executed immediately, or a limit order will be placed and executed when the predetermined price is reached.
In general, these three order types are all suitable for beginners. However, you should also pay attention to other components of contract orders, namely margin type (USDT / other coins), margin mode (cross / isolated), leverage level, direction (long / short), and other concepts in contract trading. In addition, because many beginners do not understand the characteristics of contract products and overlook leverage and margin, setting take profit and stop loss orders becomes especially important.
4. Take Profit and Stop Loss
A stop loss order is used to limit losses on an existing position, while a take profit order is used to close a position when it is profitable. Both can be placed with one click through the take profit / stop loss function.
BitTap currently provides a take profit / stop loss function. Users can set take profit and stop loss prices in advance. When the latest market transaction price reaches the set take profit or stop loss price, the system will place a closing order for the position at the best available execution price according to the contract quantity you specified. During setup, users only need to enter the take profit / stop loss price and quantity to place the order successfully.
In addition to beginners, users who already hold a position but cannot monitor the market for long periods may also consider using the take profit / stop loss function. In principle, as long as a user has an open position, the take profit / stop loss order can be used at any time according to actual needs.
For example, if you buy long BTCUSDT contracts at 66,000 USD and set take profit and stop loss based on the values shown above, it means that when the contract price rises to 70,000 USD, the take profit order will be triggered automatically to help you lock in profits in advance. When the contract price falls to 60,000 USD, the stop loss order will be triggered automatically to help you control risk.
If you sell short BTCUSDT contracts at 66,000 USD and set take profit and stop loss based on the values shown above, it means that when the contract price rises to 70,000 USD, the stop loss order will be triggered automatically to help you control risk. When the contract price falls to 60,000 USD, the take profit order will be triggered automatically to help you lock in profits in advance.
Please note that if market volatility is severe, take profit / stop loss orders may fail to be filled or may only be partially filled.
5. Post-Only
After understanding the basic order types for contracts, we can move on to more advanced order types. For example, Post-Only is an advanced feature within limit orders. It ensures that your order will definitely appear in the order book and will not match with orders already in the order book, thereby guaranteeing that your trading fee will always be charged at the lower maker rate.
Generally speaking, the purpose of using Post-Only is twofold:
- To ensure the fee is the lower maker fee.
- To avoid losses caused by operational mistakes.
The first point is easy to understand. Maker fees are usually lower than taker fees. The second point deserves further explanation. As mentioned above, sometimes our limit trigger price may be unintentionally set worse than the best market price. If we accidentally enter one extra zero or one fewer zero, the order may be executed and cause us a loss. Therefore, when the Post-Only function is enabled, if you set an order to buy a cryptocurrency at a price higher than the current market price, the system will automatically cancel your order when you place it, thereby preventing you from buying the coin at an inflated price.
6. Trailing Order
A trailing stop order is an advanced feature of the stop loss order described above. It refers to a strategy order that submits the trader’s preset order to the market when the price retraces. When the latest market price (mark price) reaches the retracement amount from the highest (or lowest) price established after the strategy is activated, the order is triggered and executed at market price. Compared with take profit and stop loss orders, trailing orders are more suitable for capturing turning points in the market. Such turning points include price pullbacks in range-bound markets, closing a position at a stop loss during trend reversals, or switching between trend-following and range-bound strategies.
The advantages of trailing orders lie in controllability of the profit model and reproducibility of the trading model. The first means that the stop loss price of a trailing stop will continue to adjust upward as profits increase, thereby expanding unrealized gains. Even if the price pulls back, the position can still be closed in time to lock in profits. The second means that trailing orders are easy to set up, greatly reducing the trading cost of continuously monitoring the market and manually adjusting orders. Their rules are more systematic, making it less likely for traders to rely on subjective judgment based on market sentiment. As a result, the trading model is more reproducible.
For example, suppose the current market price of BTCUSDT perpetual contracts is 60,000 USD. You believe the price will continue to fall, but after falling to 50,000 USD, a rebound may occur. You want the order to trigger when the rebound reaches 2%. In that case, you can set the trailing order activation price at 50,000 USD and the retracement ratio at 2%. Then, when BTC falls from 60,000 USD to 50,000 USD, the trailing order is successfully triggered.
Conversely, suppose the current market price of BTCUSDT perpetual contracts is 60,000 USD. You believe the price will continue to rise, at least to above 68,000 USD, but may then pull back after the rise. You want to close the long position if the market later experiences a relatively large pullback, so you set the trailing order with an activation price of 68,000 USD and a retracement ratio of 1%.
Then, when the price rises to 67,000 USD and later pulls back to 62,000 USD, although the retracement exceeds 1%, the order is not triggered because the activation price has not been reached. After the price rises again to 68,000 USD, the activation price is reached and the system begins monitoring the retracement. If the price later falls to 61,000 USD, then (68,000 - 61,000) / 68,000 = 1.02%, which meets the 1% retracement threshold. At that point, the trailing order is successfully triggered.
Conclusion
Whether you capture market opportunities through market orders, price trades precisely through limit orders, or execute strategies automatically through conditional orders, a thorough understanding of these different order types will help users better navigate market conditions and make informed decisions based on their trading objectives. By gaining a deeper understanding of this basic knowledge, you will be able to tailor trading strategies according to your personal preferences and goals, and become a wise trader.