How to profitably buy and sell cryptocurrency. All the nuances

How to profitably buy and sell cryptocurrency. All the nuances

Why is it important to place orders correctly, how many of them there should be, and what kind of problem round numbers pose

There are two forms of working with exchanges: for beginners — through the exchange form, where users choose which currency they want to change to, and for advanced ones — through the order terminal, where you can select the price of a transaction and set the conditions for its execution. If users want to get the most favorable prices for buying and selling coins, as well as be able to implement trading strategies, it is recommended to master the second method.

Content
Why are multiple orders always better than one?
Why should round numbers be avoided?
What are conditional and OCO orders used for?
How to set up the values of conditional and OCO order fields correctly?
Why are multiple orders always better than one?
During the purchase and sale of assets, users are advised to always use the maximum number of orders allowed for one account within one pair. Thus, it is possible to offset the inaccuracies of technical analysis and carry out transactions more often, getting a more favorable average purchase/sale price of assets.

For example, if a user is interested in buying ETH at a price of $3 thousand, it is advisable to place several orders above and below this price in order to get an average purchase price approximately equal to the desired one. If you ignore this rule and place only one order, the probability increases significantly that the price will not reach the desired point, having turned around earlier and the purchase will not take place at all.

A large number of orders, of course, requires a lot of time to arrange them, and also complicates accounting for open and closed positions. However, as in other spheres of life, a regular coefficient "amount of work done/ desired result" will work in investing and trading.

A large number of orders is also important for users with relatively large positions in small assets by market capitalization. One large order may stand out too much in the order book, or even provoke an undesirable price change for a small capitalized asset. Unnecessarily large orders and transactions can also get into automatic monitoring services for purchases and sales of "whales", then becoming the subject of news channel reports.

Why should round numbers be avoided?
Round numbers represent levels of psychological support or resistance to price movement, however, there is an unspoken recommendation from traders to avoid round numbers during the placement of orders. If the user wants to make a profit on a long position and sell the DASH he bought earlier for $100 at a price of $200, the best solution would be to place a sell order, for example, with a value of $198.44.

By placing orders in this way, users take into account the behavior of other market participants, a huge number of whom will also record their profits in the area of the round figure. If there are too many such fixations, and the balance of purchases and sales shifts towards sellers, the price may turn around earlier and not reach the round figure at all, and the user's order will remain unfulfilled.

Thus, psychological levels of support and resistance at round price values should not be taken literally, but rather as some amorphous zones next to a round number, inside which users will find increased trading activity, which can lead to a price reversal before the round number.

What are conditional and OCO orders used for?
The placement of conditional and OCO orders involves several features and depends on the chosen trading strategy. One Cancels the Other can be translated as "one order cancels another" or "either one order or the other". Such an order is a pair of two orders — limit and conditional. The limit order is immediately published in the order book, and the conditional order will appear in the book only when the condition occurs.

As soon as any order from the OCO pair is executed, the other one will be automatically canceled, since the user will no longer have enough assets to carry out the transaction. It is worth using OCO orders when the user's strategy implies the presence of both a stop loss and a take profit for one position at the same time. In OCO orders, take profit will be represented by a limit order at the price of the price field, and a stop loss by a conditional order at the price of the limit field, with a condition in the stop field.

Conditional orders are also necessary if the user's trading strategy involves buying an asset after breaking through a certain price range, the upper limit of the channel or a narrowing triangle. In the case of opening such positions, it is worth monitoring especially carefully, since the movement of the price of crypto assets is often characterized by false breakouts (fakeout). After a false breakdown, the price at best returns to the original range, or it may begin a rapid decline. The very moment of a false breakdown on the chart will later look like a wick on a small volume. The probability of false breakouts can be estimated by examining the asset's chart in the recent past.

How to set up the values of the conditional and OCO orders fields correctly?
Setting the values of the stop and limit fields of conditional orders separately, or inside OCO orders, has a number of features, knowledge of which allows you to increase the number of executed orders and avoid so-called "slips".

If the user places a stop loss on a long position, then the limit field must be specified just below the value of the stop field. If the user places a stop loss on a short position and the trigger for executing the order is touched from below, then the value of the limit field should be set slightly higher than the value of the stop field.

Why might this be important? If you set the stop and limit values too close or make them the same, the probability increases that in the event of a rapid price movement, the market will jump over the order — touching the stop value, the price will immediately continue to move, in which case the user's order will remain unfulfilled.

The most common trading strategies are when users need to set multiple take profit values, but only one stop loss value for their position. In this case, you will still have to create several OCO orders for each part of the position, the value of the stop fields for all orders will be the same, and the values of the price field representing the take profit grid will be different.