As you all know, supply and demand dictates the price of cryptocurrencies – a “law” which stays at the foundation of free markets. Prices fluctuate in accordance with the transactions taking place. And since anyone can trade digital assets 24/7/365 online, you can imagine that their values change instantly! This is when using limit orders to their full potential becomes a valuable skill. If you are an intelligent investor, you can attempt, at least, to predict the direction of the market. Using these kind of orders, you can reduce significantly the risk of your investment and position yourself to be on a profit at all times.
If you are entering your favourite exchange website, the prices might differ from the website you have seen online – because they change instantly, as I have stated above. You might see a buy price and a sell price, that are not the same. This happens in exchanges of all sorts. In this case, the buy price is the smallest amount someone is willing to sell their coin for, while the sell price is the highest amount someone is willing to give for your coin.
Constant necessary resources: time and attention
Risks: possibility of missing the right moment
Making market orders is the basic and not the smartest method to buy/sell crypto. Basically, you have to follow the price of crypto and you have to be very fast when you decide to make a transaction. If you are losing the moment, you might have wasted your waiting time. I am sure I am not the only one seeing the huge risk and constant time involvement for this option.
Using limit orders to their full potential is what any smart investor uses. It makes things so much simpler.
A limit order basically is a scheduled buy/sell. Let’s say Bitcoin is $5000 now but you want to sell at $5500. You set up a sell limit order to execute this order. That way, you don’t have to follow the prices every day in order to make sure you are not missing a sell opportunity. If you want to be more hardcore, you can set up more of these limit orders to constantly buy and sell Bitcoin for you, while making you profit. It is rather easy to observe this method does not require neither your time or attention. A smart forecast, however, is crucial. The only thing that you have to be careful of is to have money in your account every time you are waiting for a buy order to execute.
You don’t have to be worried about your orders taking time to be executed. The market is not moving instantly in the direction you want it to. But, as long as it is a realistic target, your order might execute even after you have forgot about it.
Intelligent investors of the 21st century are using limit orders to their full potential. Why shouldn’t you do it? But, of course, it is important to feel that you are in control of the situation to use them correctly. This means being able to anticipate future market trends and know how to act in many kinds of the situation. And, most importantly, you should not approach any situation with arrogance. Every time I have been too sure of myself that I know everything, I have been proven how much I didn’t. And that is what opened my eyes over time.
Anyhow, if you want to add something, feel free to leave a comment below. If you want to get in touch with me personally, use this link.