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#OrderTypes101 1. 🟢 Market Order Definition: An order to buy or sell immediately at the current market price. ✅ Use when: Speed is more important than price. ❌ Downside: May suffer from slippage if the market is volatile. Example: “Buy 1 BTC now” → Filled instantly at the best available price. --- 2. 🔵 Limit Order Definition: An order to buy or sell at a specific price or better. ✅ Use when: You want control over price. ❌ Downside: May not execute if the market doesn’t reach your limit price. Example: “Buy 1 BTC at $65,000” → Order waits until price drops to $65,000. --- 3. 🔴 Stop-Loss Order Definition: An order to sell (or buy) once a certain price is triggered, to limit losses. ✅ Use when: You want to exit a losing trade automatically. ❌ Downside: In highly volatile markets, it may execute at a worse price than expected. Example: Bought ETH at $3,000 → Place stop-loss at $2,800. --- 4. 🟠 Stop-Limit Order Definition: A combination of stop-loss and limit. When the stop price is hit, a limit order is placed. ✅ More control over execution price. ❌ May not fill if the price moves past your limit. Example: Stop price = $2,800, limit = $2,790 → Sell ETH only between those prices. --- 5. 🟣 Take-Profit Order Definition: Automatically closes a position in profit once the price reaches a specified level. ✅ Locks in profits. ❌ Like stop orders, may not always execute at the exact price. Example: Bought BTC at $60,000 → Take profit at $70,000.
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#TradingTypes101 1. Spot Trading Definition: Buying or selling an asset (e.g., Bitcoin, stocks) for immediate delivery at the current market price. Key Features: Ownership: You actually own the asset. Settlement: Immediate or T+2 (in traditional markets). Risk: Lower risk compared to futures or margin trading. No Leverage: 1:1 (You trade what you can afford). Example: Buying 1 BTC at $70,000 means you own 1 BTC. ✅ Best for: Beginners, long-term holders, low-risk strategies. --- 🔴 2. Futures Trading Definition: A contract to buy/sell an asset at a future date for a predetermined price. Key Features: No actual ownership of the asset. Leverage available (e.g., 10x, 20x). Expiration date: (for standard futures); Perpetual contracts don’t expire. Used for: Hedging, speculation. Can short: Profit from price going down. Example: You open a long position on ETH futures at $3,000 with 10x leverage. If price goes to $3,300, your return is amplified. If it drops, losses are also amplified. ✅ Best for: Experienced traders, hedging, speculation. --- 🟡 3. Margin Trading Definition: Borrowing funds to increase the size of a position beyond your actual capital. Key Features: Leverage-based spot trading (not derivative). You own the asset but it's funded partly by a loan. Interest charged on borrowed funds. Used for: Amplifying gains (and losses). Example: You have $1,000, borrow $1,000 more, and buy $2,000 worth of ETH. ✅ Best for: Medium-risk traders who want more exposure while still owning the asset. --- 🧠 Strategic Differences: Spot vs Futures vs Margin Feature Spot Futures Margin Ownership Yes No Yes (but borrowed funds) Leverage No Yes (up to 100x in crypto) Yes (usually up to 5x) Risk Level Low High (liquidation risk) Medium (interest + margin call) Use Case Investment, trading Speculation, hedging Amplify trades Interest Charges No No (but funding fees may apply) Yes Short Selling Not possible Yes Sometimes allowed Liquidation Risk None High Medium
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#CEXvsDEX101 CEX – Centralized Exchange Definition: A Centralized Exchange (CEX) is a platform that facilitates cryptocurrency trading via a central authority or company. Examples: Binance, Coinbase, Kraken, KuCoin. Key Features: Custodial: The exchange holds users' funds. High liquidity and fast transactions. User-friendly with customer support. KYC/AML compliance (Know Your Customer / Anti-Money Laundering). Security risks: Prone to hacks since funds are stored in centralized wallets. --- 🌐 DEX – Decentralized Exchange Definition: A Decentralized Exchange (DEX) allows users to trade cryptocurrencies directly with one another, without an intermediary. Examples: Uniswap, PancakeSwap, SushiSwap, dYdX. Key Features: Non-custodial: Users retain control of their private keys and funds. No KYC in most cases (more privacy). Smart contract-based trading. Lower liquidity compared to CEXs. More secure in terms of custody (you own your funds), but you must manage your own wallet security. --- 🆚 CEX vs DEX: Comparison Table Feature CEX DEX Control of Funds Exchange (custodial) User (non-custodial) Regulation Regulated (usually) Often unregulated KYC Required Yes No (usually) Ease of Use High Moderate Speed Fast Depends on blockchain speed Fees Exchange sets fees Network and protocol fees Security Prone to hacks (if poorly managed) Safer custody; smart contract risks Liquidity Higher Lower --- ✅ Summary CEX = Centralized, easy to use, but funds are in the hands of the company. DEX = Decentralized, you control your funds, but it's more technical and requires self-responsibility.
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