Amdax offers several trading options: trading at the current market price, placing a limit order, trading with a guaranteed price, and placing a stop market or stop limit order. For each order you choose the option that suits your preference and the market conditions. With Basic you trade with a guaranteed price. With Advanced you have more influence on price and timing.
What is the difference between the trading options?
- Market price: your order is filled at the current market price at the moment of execution.
- Limit order: you set a price in advance; the order is only filled when the market reaches that price.
- Guaranteed price: you trade at a price set in advance that stays valid for a limited time, whatever the price does in the meantime.
- Stop Market: you set a trigger price in advance. As soon as the market reaches that price, your order is activated and filled at the market price at that moment.
- Stop Limit: you set a trigger price and a limit price in advance. As soon as the market reaches the trigger price, a limit order is placed that is only filled at your limit price or better.
Pros and cons of market orders
The advantage of a market order is fast execution. It gives more certainty that the transaction takes place right away, without delay. This is especially useful when trading very liquid assets, where the price differences between successive transactions are usually small.
On the other hand, the execution price of a market order can vary, because it depends on the buyers and sellers available in the market. In volatile market conditions, market orders may be filled at unfavourable prices, especially when trading less liquid assets.
Pros and cons of limit orders
One advantage of limit orders is control over the price. Traders can set price levels strategically, based on their analysis of the market and their own trading strategy. Limit orders are especially useful when trading less liquid assets, where a reliable market price can be harder to get.
A possible disadvantage of limit orders is that execution is not guaranteed right away. If the price you set is outside the current market range, the transaction cannot be filled until the market price reaches that level. This can mean missed trading opportunities when the market price changes quickly.
Pros and cons of guaranteed price orders
Guaranteed price orders give traders the certainty that a transaction is filled at a price set in advance, whatever the market does at the moment of execution. When you place the order, the price is held for you for a few seconds. As a result you may pay more or less than the current market price. Amdax takes over this price risk from you entirely. In return a risk surcharge is applied. This surcharge allows Amdax to carry the market risk between acceptance and execution of the order.
Pros and cons of stop market orders
With a stop market order you react automatically to a price movement, even when you are not following the market yourself. As soon as the price reaches your trigger price, the order is activated and filled at the market price at that moment. The disadvantage is that you have no certainty about the execution price. Between activation and execution the price can move further, especially in volatile market conditions or with less liquid crypto assets. The final price can therefore differ from your trigger price.
Pros and cons of stop limit orders
A stop limit order combines the automatic activation of a stop market order with the price control of a limit order. As soon as the price reaches your trigger price, a limit order is placed. It is only filled at your limit price or better, so you know in advance the least favourable price at which your transaction can take place. The disadvantage is that execution is not guaranteed. If the price moves past your limit price quickly after activation, the order may not be filled, or only partly.