Understanding How Buying, Selling, and Orders Work in Crypto Trading Cryptocurrency trading can be a complex world to navigate, especially for beginners. Before diving into trades, it's essential to have a clear understanding of how buying, selling, and order execution work. This article aims to shed light on these concepts and provide clarity on related scenarios.
Buying: When buying a cryptocurrency, let's say 1 BTC at a price of $20, you can set stop loss and take profit levels. If you set your take profit at $40, it means that when the price reaches $40, the trade will close automatically. However, you will still own 1 BTC, now valued at $40. So, you won't have 2 BTC, but the value of your single BTC will be $40.
Selling: When selling a cryptocurrency, for instance, 1 BTC at $20, you can also set stop loss and take profit levels. If you set your take profit at $10, it means that when the price reaches $10, the trade will close automatically. In this scenario, you have indeed sold 1 BTC at $20, but it won't buy you back automatically. To make a profit, you need to manually buy back the cryptocurrency when the target price is reached.
It's important to note that the target price, in this case, acts as an indicator for when you should consider re-entering the trade to maximize your profits. However, it won't execute the buy order automatically; you need to monitor the market and make the necessary buy trade yourself.
Understanding how buying, selling, and order execution work is crucial for successful crypto trading. By setting clear goals and knowing when to enter or exit a trade, you can make informed decisions and increase your chances of profitability.
Please note that this information is for educational purposes only and does not constitute financial advice. Always do thorough research and consult with a professional before making any investment decisions.
submitted by u/NULLBASED
Buying/Selling/Orders - Understanding how they work