You just learned about trading forex, trade coin on the exchanges? But you don't know what is the limit order? What is a buy limit? What is a sell limit? If so, then immediately see this article go offline!
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What is a limit order?
A limit order is a user order to buy or sell at a desired price. Usually buy a lower price or sell higher than current price.
What is a buy limit?
Buy limit is a limit order when you are in a long position. It is easier to understand that you are buying a property with a price lower than the current price.
In technical analysis, people will buy in a strong support area because often when the price touches this level it tends to bounce back.
For example: The price of gold is currently at $ 1700. But you feel the current price is too high and think when gold about $ 1600 the price will rise again.
Moreover, you have identified this strong support area. Then you just need to place a buy limit order for $ 1600 is done.
What is a sell limit?
Sell limit is a limit order when you are in a short position. That means you are trying to sell an asset at a price higher than the purchase price. According to technical analysis, users often buy in the strong resistance area because at that time the price tends to decrease when touching this area.
For example: You bought gold for $ 1700. You want to sell gold for $ 1800 or have determined this price to be a resistance area.
At this point, you only need to place a sell limit order for $ 1800 to finish. The only thing left to do is to sit on your lap and order.
Pros and cons of limit orders
- Consistent with those with a lot of work there is no time to monitor the market
- Buy better than current market price
- Simple, easy to manipulate
May miss the opportunity to buy or sell
The price does not decrease to the price you desire but has increased while you have placed a buy limit available there. Or you have set Sell limit at a higher price but the price is not up to you so you can execute the order.
Loss when the price falls without braking
Even though you have bought a low price, but if the price slumps without braking, you can still lose.
Example of limited order in everyday life
If you are still confused with what you said earlier. Let's see the real life example that you often encounter for this to be easy to imagine!
Buy limit order
You have 2 billion in hand. You are considering buying a piece of land. This land seller sells for equal to the amount you are 2 billion always.
But now you do not need to buy urgently and want to leave some money to do other things, so you only spend 1 billion 8 to buy land.
You can pay the seller or just wait for the land to fall and buy it. The buy limit command works the same way. The above example is the order to buy a piece of land 1 billion 8.
Sell limit order
You received a piece of land from your mother in Ben Tre. Because there is no need to live or do anything else, you want to sell this land for 1 billion.
And you do not need money urgently, so those who ask to buy for 800, 900 million you do not sell. Only 1 billion, you will sell.
Do you see any similarities? This is a sell limit order for your mother's land for 1 billion.
Hopefully through this article, everyone has a better understanding of the limit order as well as what is the limit or sell limit.
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