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 trading method that suits your preference and the market conditions. In the standard environment, you trade with a guaranteed price. In the advanced environment, you have more control over price and timing.
What is the difference between the trading options?
- Market: your order is executed at the current market price at the time of execution.
- Limit: you set a price in advance and the order is only executed when the market reaches that price.
- Price Guarantee: you trade at a predetermined price that remains valid for a limited period, regardless of any price movements in the meantime.
- Stop Market: You set a trigger price in advance. Once the market reaches this price, your order is activated and executed at the market price prevailing at that moment.
- Stop Limit: You set a trigger price and a limit price in advance. Once the market reaches the trigger price, a limit order is placed that is only executed at your limit price or better.
Advantages and disadvantages of market orders
The main advantage of a market order is speed of execution. It offers a high degree of certainty that the transaction takes place immediately, without any delay. This is particularly beneficial when trading highly liquid assets, where price differences between consecutive transactions are usually minimal.
On the other hand, the execution price of a market order can vary, as it depends on the availability of buyers and sellers in the market. In volatile market conditions, market orders may be executed at unfavourable prices, especially when trading less liquid assets.
Advantages and disadvantages of limit orders
One of the key advantages of limit orders is price control. Traders can strategically set price levels based on their market analysis and individual trading strategies. Limit orders are especially useful when trading less liquid assets, where obtaining a reliable market price can be more difficult.
A potential disadvantage of limit orders is that execution is not immediately guaranteed. If the specified price falls outside the current market range, the transaction cannot be executed until the market price reaches that level. This can result in missed trading opportunities if the market price changes rapidly.
Advantages and disadvantages of price guarantee orders
Price guarantee orders give traders the certainty that a transaction will be executed at a predetermined price, regardless of market movements at the time of execution. When placing the order, the price is held for you for a few seconds. As a result, you may end up paying more or less than the current market price. Amdax takes this price fluctuation risk entirely off your hands. In return, a risk premium is applied, which enables Amdax to bear the market risk between the acceptance and execution of the order.
Advantages and disadvantages of stop market orders
A stop market order lets you respond automatically to a price movement, even when you're not monitoring the market yourself. Once the price reaches your trigger price, the order is activated and executed at the market price prevailing at that moment. The downside 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 cryptoactiva. As a result, the final price may differ from your trigger price.
Advantages and disadvantages 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. Once the price reaches your trigger price, a limit order is placed. This is only executed at your limit price or better, so you know in advance the least favorable price at which your transaction can take place. The downside is that execution isn't guaranteed. If the price moves quickly past your limit price after activation, the order may not be executed, or only partially.