Special thanks to the Prof @yousafharoonkhan for this wonderful detailed lecture on Exchange Order Book and its Uses and How to place different orders. So in this post, i will be answering the task questions in my own words and to the best of my understanding.
Question no 1 :
What is meant by order book and how crypto order book differs from our local market. explain with examples (answer must be written in own words, copy paste or from other source copy will be not accepted)
First of all, Order book is a list of orders that contains what we want to buy and the prices at which the sellers are likely to sell to us or give us. Basically, it gives buyers the better understanding of what the market trends might be and how they can change over time. I would use my grocery shopping as an example, before i go to the market, i usually write out the list of what i want to buy from the market and prices that the shops might likely be selling them and most times i have to go from one shop to another to get the best price of what i want to buy. This process helps me to make an informed decision on what i want to buy and That is exactly what an order book in an exchange does too.
Now, when it comes to the Crypto Order Book, it has the same philosophy as i have explained above. The exchange platform which is just like the grocery shop which contains the order book, here there is the buyer with the crypto in his wallet and the seller that has the coins that the buyer might want to purchase. With this, the buyer gets informed of what the prices might be. If the buyer isnt satisfied, he will keep moving from one exchange platform to another for more better prices. With all the information gathered, the buyer is able to make a better decision, this is just what represents an order book.
One of the major difference between the local market and the Crypto Order book is the fact that the Order book has the crypto coin pairs which goes with buying and selling. One crypto can be traded with two or more pairs, lets take STEEM for example, it can be traded with BTC, ETH or USDT, making us have the pairs as STEEM/BTC or STEEM/ETH etc which is what the order book will be recorded as.
Furthermore, the local market is more stable than the Crypto Order Book in the sense that prices can be fall or raise at anytime but it still holds more information than the local market which is usually kept manually and not upto date.
Question no 2 :
Explain how to find order book in any exchange through screenshot and also describe every step with text and also explain the words that are given below.(Answer must be written in own words)
Support and Resistance
**How to find an Order Book in any Exchange.
I will be showing this procedure with the binance exchange platform.
- First login to the Binance exhange platform and click on the "market" icon below which is second from the left side of the front page.
- Next is to click on "spot" which brings out the coin pairs, here i am using the STEEM/BTC pair.
- After that, click on the coin pair, this takes you to the Order Book and other information you might need about the coin pair.
Like i said earlier, one of the major component of an Order book is the coin pair and it is a combination of two coins which is use during trading in an exchange platform. For example, STEEM/BTC indicates that STEEM and BTC are pair. This pair allows a trader to buy STEEM with BTC or sell STEEM for BTC. Apart from the cryto to crypto pair, there is also the fiat/crypto pair where the trading is basically the same. Just like you have USDT/NGN, here the first currency is the base currency while the second currency is the quote currency.
Support and Resistance.
Support and resistance is a popular and widely used technique that is understood when a technical analysis is carried out on the chart. Its really impossible to master but easy to understand. The support and resistance are areas where you can anticipate a price reaction on a trade. Different traders use these levels according to their own strategies so there are so many ways to locate these areas and use them too during trading.
The support level is the level where prices regularly stop falling and bounce back up while the resistance level is the level at which prices stop rising and take a dip back.
This is usually seen on the spot area of the exchange and it is a type of order that is used to carry out a trade at levels that is better that the current market price. On the limit orders, there is the entry order which is the order that opens a new position and the closing order which ends an existing position. The limit orders enables a user to know the minimum price at which he can sell or maximum price at which he can buy a coin.
This refers to the request made by a trader to buy or sell a coin at the best price. The market order is usually executed on behalf of the user by a broker and they usually know when to take advantage of the best price thats available because the market can be unstable and volatile. The Market Order is a reliable and fast method that a trader can use to enter or exist a trade.
Question no 3 :
Explain the important future of order book with the help of screenshot. In the meantime, a screenshot of your exchange account verified profile should appear (Answer must be written in own words).
The cryptocurrency order book has some features that are well seen and contains a trading pair. This order book contains records of ongoing buying /selling by traders and this gives new or old traders the insight of what the market is before they can make their decision of starting a trade. So i am going to be showing how to get to these features.
- First login to Binance Exchange and goto the market icon which is down the front page.
- Click on any pair of your choice, as you can see from the screenshot i chose the STEEM/BTC pair
- This would take you to the chartstick and order book where you see details of the buy and sell orders.
So from the screenshot above, the order book shows the buy and sell of the coin pair that i have chosen, this gives more information to the trader and also helps the trader make i better decision on the coin pair.
SCREENSHOT OF MY ACCOUNT.
Question no 4 :
How to place Buy and Sell orders in Stop-limit trade and OCO ,? explain through screenshots with verified exchange account. you can use any verified exchange account.(Answer must be written in own words)
How to place Buy Orders.
Placing a Buy Order is a way that a trader can use his available coin in his wallet to purchase another coin that he needs. This process can be done with different tools like the Limit Order, Market Order, Stop-Limit Order and OCO. I will be explain how to use the above mentioned with some screenshots and will be using TRX in my wallet to purchase BTT coin with 100% of my coin and Limit Market.
How to place a Buy Order with Stop-Limit.
Using the Stop-Limit tool enables the trader track his losses and profits doing a trader. So learning the chart will really help the trader. So i will showing you all how to use the Stop -Limit Buy.
- First click on the drop-down arrow showing Limit as seen in the screenshot below and chose the Stop-Limit icon.
- Next you input your Stop BTC, Price and Amount needed in the boxes as seen below.
after that you can click on the BUY STEEM.
Also for the Sell option, its the same process only that at the end after inputting everything required, you click on the Sell Button.
How to use the Stop-limit Orders to Sell.
- First click on the drop down like we did before for Buy option and chose the Stop-Limit.
- Next, you input Stop BTC, Price BTC Amount needed in the boxes as shown below and click on the SELL BUTTON .
How to place The OCO.
Placing an OCO is a way of giving a trader more advantage during a trade and receiving rewards too. The trade has the option of chosing both the Limit and Stop-Limit but once one of them starting executing, the other cancels by itself.
So below is how to place OCO BUY option.
- Click on the drop down to chose the OCO option.
- Next is inputting the values of the Limit and Stop-Limit So that once the market price shuts up, the Limit and trade starts executing, hence canceling the Stop-Limit Order.
Same procedure for Selling option only that the Sell button will be clicked. Just as below.
- Click on the drop-down to the OCO options.
- Next, you input values as needed for the limit order and Stop-Limit Order and then click on the sell button.
So from the screenshot about i just sold my available STEEM to purchase BTC.
Question no 5 :
How order book help in trading to gain profit and protect from loss?share technical view point, that help to explore the answer (answer should be written in own words that show your experience and understanding)
So far, i have been able to understand the unique features of the Crypto Order Book which include the Market Limit. It helps the traders to trade and gain profits even if the prices are affected or influenced by the market change. This also help traders to use the bullish trend to make profit in a way that traders can buy and sell off quickly making them gain some profit immediately. However, Another feature of the Order book that can help to avoid loss of asset is the Stop limit, this helps to stop or exit a trade when the market is about to break or go into a dip. The Stop-Limit is mostly user when the market volatility is very high.
However, my technical view application is directed towards the support and resistance in trade part. Since it has helped me to understand the maximum limit at which a coin can get to and the minimum low point that a coin can also get to, i can be able to know my entry and exit point, when to place a limit and Stop-limit order too so as to avoid loss of assets.
Thank you for reading.