Common order types in centralized exchanges include the following:
Market Order
- Definition: An order that is executed immediately at the current best market price. When a user places a market order, there is no need to specify a price; the exchange's system will match the order at the fastest speed to the current best buy or sell price available in the market.
- Features: Fast transaction speed, ensuring that orders are executed quickly, especially when market prices fluctuate significantly, allowing investors to enter or exit the market promptly. However, the downside is that the execution price cannot be controlled, and it may be executed at less than ideal prices during rapid price changes.
Limit Order
- Definition: The user specifies a specific price, and the order will only be executed when the market price reaches or exceeds this specified price. For example, if an investor places a buy limit order at a specified price of 100 yuan, the order will only be executed when the market price drops to 100 yuan or below; the sell limit order works the opposite way, only executing when the market price rises to the specified price or above.
- Features: Investors can control the transaction price, allowing them to execute trades at their expected prices. However, there is uncertainty in execution; if the market price does not reach the specified price, the order may not be executed.
Stop Loss Order
- Definition: Primarily used to control losses. Investors set a stop-loss price; when the market price reaches or breaks through this stop-loss price, the stop-loss order automatically converts to a market order or limit order for execution. For example, if an investor holds an asset and sets a stop-loss price of 90 yuan to prevent excessive loss from a significant price drop, when the market price falls to 90 yuan, the stop-loss order triggers and may sell the asset at market price or the limit price specified by the investor.
- Features: Can effectively limit losses, helping investors exit the market promptly during unfavorable market conditions to protect capital safety. However, if the market is volatile, unnecessary stop-loss operations may occur due to short-term price touches on the stop-loss level.
Take Profit Order
- Definition: In contrast to stop-loss orders, these are orders set by investors to lock in profits. When the market price reaches or exceeds the take profit price set by the investor, the take profit order will automatically execute. For example, if an investor buys an asset at 80 yuan and sets a take profit price at 120 yuan, when the price rises to 120 yuan or above, the take profit order triggers, selling the asset to realize profit.
- Features: Helps investors lock in profits timely and avoid profit shrinkage due to market reversals. However, if the market trend is strong and the asset price continues to rise significantly after triggering the take profit, investors might miss subsequent profit opportunities.
Iceberg Order
- Definition: This type of order splits large orders into multiple smaller orders, hiding the true scale of the order. On the trading interface, only a portion of the order volume is displayed, like the tip of an iceberg above the water, while the majority of the order volume is hidden.
- Features: Can avoid significant orders causing a noticeable impact on market prices, preventing market panic or adverse price movements caused by exposing large orders. At the same time, it can protect the investor's trading intentions and strategies from being easily detected. However, since the order is executed in batches, it may take a longer time to complete the entire order.
