Many terms are important to understand in business and commerce, including order. In general, order means an order, request, or instruction to act.
In buying and selling transactions, an order is a purchase order for goods or services submitted by a buyer to a seller.
In the trading world, an order is an instruction given by an investor to a broker or intermediary that aims to buy or sell a particular asset.
To better understand what order is, the meaning of limit orders in trading, and the types and examples in crypto, check out the full review below!
What is Order?
Quoting everpro.id, according to the Cambridge Dictionary, an order can be defined as a request to make, supply, or deliver food or goods.
In Indonesian, the translation of this definition is a request to make, supply, or deliver food or goods.
Furthermore, according to the Big Indonesian Dictionary (KBBI), order is an order to do something.
Thus, in summary, an order means an order that includes both a request and an order to act.
This word is commonly found in various contexts of daily activities, such as when speaking, ordering at a restaurant, shopping, or purchasing online.
The Meaning & Types of Order in Online Buying and Selling
Quoting the szetoaccurate.com page, at least three (3) types of orders are often encountered when making transactions through online stores. The following is an explanation of each type:
1. Pre Order
The definition of pre-order (PO) refers to a purchasing system where the goods are not yet available directly from the seller. The buyer must make an order and payment first, then wait for a certain period according to the estimate determined by the seller to receive the item. Generally, the pre-order process will take between 3 days, 7 days, and 14 days, depending on the period set by the seller.
2. Open PO (Pre-Order)
Meanwhile, Open Pre-Order or Open PO in an online store refers to a process where the buyer must place an order and wait until the item is available before it can finally be delivered to the buyer’s destination address.
3. Close PO (Pre-Order)
Closed Pre-Order or Close PO refers to a condition where Pre-Order orders can no longer be accepted. This term comes from the English language, where the word “Close” means “Close” and “Order” is defined as an order. Although it comes from a foreign language, the term closed order is commonly used among Indonesians.
Understanding Limit Order in Trading
A complete explanation of the meaning of limit orders in the trading world, where investors give orders to brokers or intermediaries to buy or sell a certain asset.
Types of Limit Order in Trading
It is important to note that several order types are commonly used in trading activities. The following is a review of each type:
1. Market Order
The first type of order is a market order. A market order is defined as an order or instruction from an investor to immediately purchase or sell an asset at the current market price. Market orders are one of the most common types of order transactions and are designed to execute trading orders as quickly as possible at the current market price.
2. Limit Order
Unlike market orders that follow the market price, limit orders are a method traders use to determine the desired price when buying or selling an asset. Limit orders anticipate possible reversals when prices approach support or resistance levels.
3. Stop Order
A stop order is an instruction to execute a market order when the stop price has been reached. Given that a stop order works by executing a market order, the asset’s price may be slightly different than expected. Stop orders are divided into two (2) types:
1. Stop Sell
A stop sell is a sell order placed at a price level lower than the market price. Typically, stop-sell orders reduce potential profit losses if the price experiences a significant decline.
2. Stop Buy
A Stop Buy is a buy order placed at a price level higher than the market price. Stop-buy orders are generally used to reduce the risk of loss on short positions.
4. Buy stop order
Buy-stop orders are entered at a stop price above the current market price. Investors generally use buy-stop orders to limit losses or protect profits on stocks they have sold short.
5. Day Order
A day order is a limit order with a duration of one trading day. This means that the order will automatically become inactive after the end of the trading day. Day orders are a good choice for intraday traders who want to monitor market price movements without having to check the asset price on a recurring basis constantly.
6. Trigger Order
A trigger order is an instruction to place a stop order when an asset reaches a certain predetermined price.
7. Order Cancel Order (OCO)
Order Cancel Order (OCO) is the placement of two orders, where if one of the orders is executed, the other order is automatically canceled. The cost of an OCO is a combination of a stop order and a limit order. This type of order is usually used for volatile assets traded over a wide price range.
8. Limit Sell Order
A limit sell order is a sell order placed to initiate a sell transaction at a price level above the market price. For example, if a trader sets a limit sell order at IDR 5,000,000, the asset will be sold when the market price reaches or exceeds IDR 5,000,000.
Example of Limit Order in Crypto
Quoting bitsgap.com, as an example of a limit order in crypto, let’s say Jim wants to buy some DOGE but is worried about the price. For several days, the coin’s price has fluctuated within a horizontal price range without experiencing significant changes.
Instead of waiting all day in front of his computer, Jim can place a limit order to buy DOGE at a price that makes it convenient for him to make the purchase.
When the price of DOGE drops according to Jim’s goal, the buy limit order will be executed, and he can acquire DOGE at his desired price.
Conclusion
To conclude, a good understanding of the different types of orders in crypto trading is essential for market participants.
From market orders that are executed immediately to limit orders that allow more control over the price, each type of order has its own role and use.
Also, as a disclaimer for beginner traders, the use of orders should be done effectively and wisely. Doing careful research, understanding market trends, and determining a suitable trading strategy will help make better decisions.
Trading with Over-the-Counter (OTC) Feature on INDODAX
Now, you understand what an order is, the meaning of limit orders in trading, its types, and examples in crypto.
Furthermore, if you want personalized services to buy and sell crypto assets in amounts too large to be processed through the order book, you can visit the OTC crypto page on INDODAX.
Please note that prices in OTC services will always follow market price movements because transactions occur on the spot market. Even if the nominal purchase amount increases, it does not guarantee a lower price.
This service focuses on the convenience of transactions for users, where a dedicated team will guide through all procedures, ensure security, and maintain user privacy.
Start trading with OTC on INDODAX right now!
