Understanding Order Types

Different order types give you different levels of control over your trades. Understanding them is essential for effective trading and risk management.

Using the wrong order type can result in unexpected prices, missed opportunities, or unnecessary losses.

A market order buys or sells immediately at the best available price.

When to use: When you want guaranteed execution and don't mind paying the current market price.

Pros: Instant execution, simplicity. Cons: No price control (especially in volatile or illiquid markets). You may experience "slippage" — the executed price differs from what you saw.

Example: You place a market buy order for 1 ETH. If the best ask is $3,500, you'll buy at roughly that price (plus any slippage and fees).

A limit order sets the maximum price you'll pay (buy) or minimum price you'll accept (sell). It only executes at your specified price or better.

When to use: When you have a specific target price and are willing to wait.

Pros: Price control, no slippage. Cons: No guarantee of execution. If the price never reaches your limit, the order stays open.

Example: ETH is trading at $3,500. You place a limit buy at $3,400. Your order only fills if someone sells at $3,400 or lower.

A stop-limit combines a stop price (trigger) with a limit price. When the market reaches the stop price, a limit order is placed at the limit price.

When to use: To protect against losses (stop-loss) or to enter a position when momentum confirms a breakout.

Example — Stop-Loss: You own ETH at $3,500. You set a stop-limit sell with stop price $3,200 and limit price $3,180. If ETH drops to $3,200, a sell limit order at $3,180 is placed.

Example — Breakout Entry: You want to buy if ETH breaks above $3,600. Set stop price $3,600 and limit price $3,620. When $3,600 is hit, a buy limit at $3,620 is created.

Risk: In a fast crash, the price might gap below your limit price, leaving the order unfilled.

Maker — An order that adds liquidity to the order book (typically limit orders that don't fill immediately). Makers usually pay lower fees because they improve market depth.

Taker — An order that removes liquidity from the order book (market orders or limit orders that fill immediately). Takers pay higher fees.

On NexChange, makers pay 0.10% and takers pay 0.20% (standard tier).