What are the available order types and how do they function?

Order types available on HootDex include Market Orders, Limit Orders and Stop-Loss Orders.

Market Orders:
  • Function: A market order is an instruction to buy or sell a digital asset on HootDex immediately at the current market price. Market orders prioritize execution speed over price, aiming to execute the trade as quickly as possible.
  • Execution: When you place a market order to buy, you’ll pay the current market price for the digital asset on HootDex, which might not be the same as the last quoted price due to market fluctuations. When you place a market order to sell, you’ll receive the current market price for your digital assets.
  • Use Cases:
    • Market orders are often used when traders want to enter or exit a position quickly, regardless of the exact price.
    • They are suitable for highly liquid digital assets with tight bid-ask spreads.
2. Limit Orders:
  • Function: A limit order is an instruction to buy or sell a digital asset on HootDex at a specific price or better. Unlike market orders, limit orders prioritize the price at which the trade is executed over the speed of execution.
  • Execution: If the market reaches the specified price or a better price, the limit order is triggered and executed. If the price doesn’t reach the specified level, the order remains open until it’s filled or canceled by the trader.
  • Use Cases:
    • Limit orders are used when traders have a specific price in mind and are willing to wait for the market to reach that price.
    • They are helpful for setting entry and exit points or implementing trading strategies based on price levels.
3. Stop-Loss Orders:
  • Function: A stop-loss order is a risk management tool used to limit potential losses on HootDex. It is set at a price below the current market price for long positions (sell stop-loss) and above the market price for short positions (buy stop-loss).
  • Execution: When the market price reaches or surpasses the specified stop price, the stop-loss order is triggered and becomes a market order. The goal is to limit losses by executing the order as close to the stop price as possible.
  • Use Cases:
    • Stop-loss orders are employed to protect against unexpected price declines on HootDex.
    • Traders use them to automate the process of selling a cryptocurrency if its price moves against their position, reducing the need for constant monitoring.