Poloniex supports three types of orders for spot trading: limit, market, and stop-limit (including stop-market).
- Limit Order
A limit order requires you to decide the quantity of the token you want to buy or sell and the lowest acceptable ask or highest acceptable bid for the order. Only when the market price meets the requirement of a limit order will the order be executed. To place a limit order, you need to enter the maximum or minimum price you accept for buying or selling your asset (the "limit price"). Then, your order will be placed on the order book and only executed when the market price rises or falls to your pre-defined threshold.
Unlike market orders executed at the market price upon being placed, limit orders allow you to have better control over the price of your trades. The automatic execution of such orders frees you from monitoring the market 24/7 and worrying about missing the best opportunity to buy or sell. However, Poloniex does not guarantee that your limit order will be executed: it will remain in the order book if the limit price you have entered is not reached by the market.
How does it work?
A limit order will go on the order book as soon as it is submitted and stay there until the market price reaches its limit price. For example, if you wish to sell 10 ETH at $2,000 each when the market price is $1,500, you may place a limit sell order with a limit price of $2,000. When the price of ETH rises to the limit price or above, your order will be filled based on the market liquidity. Please note that your other ETH sell orders, if any, will be filled before the limit order is executed, and how much of the limit order will be filled depends on the remaining liquidity of the market.
- Market Order
A market order allows you to buy or sell at the best price available in the market right away; you do not have to wait long for your order to be executed. Market orders fill the open limit orders that offer the best prices in the order book and thus make the market more liquid. If you want to buy or sell immediately at the current market price, making a market order is your best choice.
How does it work?
Different from limit orders in the order book, market orders are executed immediately at the current market price. There are always two parties in a trade: maker and taker. When you place a market order, you are essentially accepting the price set by the maker, and that means Poloniex will match your market buy order with the lowest ask in the order book and your market sell order with the highest bid.
As such, an exchange's order book has to have sufficient liquidity so that market orders can be filled timely. Getting your market order executed means that liquidity will be removed from the order book, so your trading fee as a taker is higher than that of a maker. Please keep monitoring the order book's liquidity and be cautious about the risk.
Learn more about how to make a market order (on Poloniex)
- Stop-Limit Order
A stop-limit order lets you set the stop price, limit price, and order amount for a trade. When the stop price is reached, the order will be placed automatically at the predetermined limit price and order amount so as to help you ensure a profit or limit a loss.
A stop-market order allows you to set the limit price of a stop-limit order to the market price. You need to define the stop price and order amount, and when the stop price is reached, your order will become a market order and be filled instantly.
A stop-limit order comes in handy when you want to limit the loss on a trade. You can set a stop price and a limit price for your order. If the current market price of BTC is $10,000 and you place a stop-limit order (either buy or sell) at a trigger price of $9,900 and a limit price of $9,800. When the BTC price drops from $10,000 to $9,900, a limit order will be automatically placed at $9,800. In a nutshell, the system will only place an order when the trigger price is reached.
The logic of a stop-market order is similar to that of a stop-limit order. However, when the stop price of a stop-market order is reached, it triggers a market order instead.
*Due to market volatilities, the executed price of a market order may be lower/higher than the last traded price that users may see on the order placement page. Users shall consider the market depth and price fluctuations and bear the risks by themselves.
Learn more about how to conduct a stop-market order (on Poloniex)