Disclaimer not financial advice. Not an expert. Anyone trading Chia or other cryptocurrency does so at their own risk.
This is going to be another nice short entry to finalize our beginner introduction trading guide.
In parts 1-3 of our introduction to trading chia series we covered everything from what is an exchange to making your first simple limit or market order. In part 4 we will briefly cover the final basic trading option a stop limit order.
There are a lot of use names when using stop limit orders. The trading process itself is similar the only real difference being the position you are currently taking. Basically all are an equal means to try and squeeze an extra few dollars out of your sell orders, and save you a few bucks on your buy orders.
A stop limit order works exactly the same as a limit order with one caveat: it adds an extra range to the top or bottom of the order (depending on what you are trying to accomplish). These are called “stops” and “limits”; what you call each depends on the position you currently hold and if buying or or selling.
Once a limit and stop price are set we wait for the market to reach our set price range. So if we are selling Chia and set a stop price of 150$ and a profit limit of 155$. Our order could execute somewhere in between 150$ and 155$ (Reminder prices are in USDT not $USD).
At the absolute edges of the range stops and limits can become market orders to be immediately executed. Reminder that limit orders can be seen by the exchange, stop orders cannot until triggered. Fast moving markets can really have an effect on these types of orders; set ranges with which the algorithm can safely execute the trade for best results. Executed trades that fall outside the ranges are referred to as “slippage” and it happens when the price moves so fast that the Order gets executed at a price not specified within the range.
Slippage can work in both your favor and not in your favor. If the price slips lower than a stop (150$) that would be bad, alternatively if the price slips above your limit (155$) that would be good; when used in the case of selling as exampled above.
Knowledge of stop orders will help Chia farmers really squeeze those last few extra dollars out of the market; without having to panic watch the market. Knowing how Stop limit orders work in the most basic sense; will help us in more intermediate trading techniques such as: stop grid trading and should also be used when setting up trading bots. Stop limit orders should only be used once you understand the first two order types. Remember to walk before you run.
With that we have finished our very basic beginners introduction to trading Chia. Now that we have gone through the process of how to choose our exchange up until making our first trade. We should be able to Really maximize the profits out of our Chia farms. Going forward we are going to finally cover how to understand everything else going on around you (charts, candles, moving averages) as well as using that information to set strategies to help you maximize Chia profits. Anyone who hasn’t had a chance to should also read my “allegory To Mr. Market“.
If there is anything you would like me to cover regarding the Chia markets Please don’t be afraid to comment or drop it in the chiaplot.net discord post suggestion channel; and I will do my best to cover that topic in an upcoming post.