Blockchains and cryptocurrencies took the world by storm last year, and such decentralized digital assets are easily one of the hottest topics in trading communities. However, the cryptocurrency exchange market provides very little support for advanced and experienced traders, severely hindering the development of cryptocurrency as an alternative asset class. The road to mainstream adoption of cryptocurrency trading remains challenging.
The current state of the cryptocurrency market is exceptionally fast-paced and highly volatile. While veteran HODLers are no strangers to dips and crashes, many new crypto traders are not accustomed to the swings of such an exceptionally mercurial market, and are easily manipulated by FUDs, rumors, and hyped coins and pump-and-dump schemes.
The Plutux Solution: Algorithmic trading and Advanced Order Types
Unlike most traditional markets, cryptocurrency markets trade 24/7. With their highly unstable nature, crypto markets are especially difficult environments for traders to capture opportunities with precision. However, with a well developed algorithmic trading strategy, it is possible for traders to execute high-speed decisions and transactions to seize the perfect opportunity in the cryptocurrency market.
In addition to fundamental buy and sell orders, advanced orders allow traders to set order triggers for cryptocurrency (and stocks) based on the movement of price. With advance orders, sophisticated traders can execute a combination of automated buy/sell orders without having to watch the market movement all day, allowing them to effectively control both their entries and exits at the optimal time. Because the current state of the market is so volatile, advance orders can be exceptionally useful in the cryptocurrency markets.
The following comprises a short selection of advanced algorithmic trading options available on the forthcoming Plutux cryptocurrency trading platform.
A trailing stop is an advanced order type that can be set at a predetermined amount or percentage below the current market price. Take BTC for example; you can place a trailing stop order $500 below the current market price of BTC. As the market price rises, the stop price follows by the trail amount. If BTC goes up to $8000, the trailing stop price would be $7500 and so forth. However, if the market price of BTC falls, the stop-loss price would not change, and a sell order is submitted when the stop price is met. Trailing stop allows traders to continue to profit as long as the market is moving in favor of the traders but closes the position as the market reverse, allowing for maximum possible gains while minimizing loss.
A single contingent order is a straightforward order type that is only executed if a single, specific condition is met. This order allows traders to execute a desirable trade without needing to monitor the market all day. A condition can have different trigger values such as last trade, bid, ask, volume, and change %. Assume you want to buy BTC at USD $7000 and sell for 2% profit, you may set a contingent order to automatically trigger a sell signal for your BTC whenever you get a 2% return. During this trading period, you do not have to monitor your position constantly. By contrast, a multi-contingent order is an advance order that can only be submitted when two or more specific conditions chosen by the trader are met. Traders have the flexibility to determine whether they want the trade to execute when both of the conditions are met simultaneously, or whether both conditions must be met in sequential order. This allows traders to set predetermined risks and predetermined profit targets.
One-Triggers-the-Other (OTO) and One-Cancels-the Other (OCO)
One-Triggers-the-Other (OTO) is another type of contingent order, which simultaneously creates two different orders, the primary order, and the secondary order. When a trader places an OTO, the primary order is placed on the market immediately. Once the primary order executes in full, the secondary order will be automatically triggered and goes live on the market. Assume ETH is trading at $500. You can use OTO set a primary order to buy at $480 and a $5 trailing stop loss as your secondary order. Once ETH drops from $500 to $480, you will automatically enter the market at $480, also triggering your secondary trailing stop loss order. This allows you to buy in at a favorable position if ETH starts to trade higher and stop if the market reverse.
In contrast, One-Cancel-the-Other (OCO) is the opposite of OTO. In an OCO order, two orders are both active on the market, but if either one of the orders successfully executes, the other order will be automatically canceled. For example, traders may place both a stop loss and a take profit target. These contingent orders can be especially helpful for mitigating risks, especially when the cryptocurrency market is very fast moving.
Fill-or-Kill is an advanced order type that specifies an order must be filled entirely and immediately; if this specification is not met, the order will be canceled (or killed). It is important to note that a partial sale or purchase of the order will not be accepted. The purpose of Fill-or-Kill is to ensure traders enter a position instantly at a predetermined price, eliminating the risk of slippage.
The forthcoming Plutux cryptocurrency trading platform will empower our users with both advanced and user-friendly algorithmic trading features in a mobile-centric environment. At Plutux, regular traders can evolve into highly-skilled algorithmic traders by utilizing Plutux’s pre-set algo order templates to identify trading opportunities and avoid unnecessary mistakes. Experienced traders who crave flexibility and sophistication can create their algo strategies and share with the community to earn PLTX, the token that powers the Plutux exchange.
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Investment in Bitcoins (or any other cryptocurrency) involves greater risks than associated with investment in traditional currencies or assets and as a result losses of capital may occur. We advise that you should not invest more than you can afford to lose.
Trading on an Exchange carries a level of risk and may not be suitable for everyone. Trading through an online platform could carry additional risks. You should therefore carefully consider whether trading and Bitcoin investment are appropriate for you.