How to buy and sell on the Bit.Team DEX — order books made simple
Trading in cryptos can be complicated and risky, requiring quite a high level of understanding. The Bit.Team DEX aims to make trading simple, secure and fast.
Exchanges exist to allow for trading. It doesn’t matter whether it is the giant New York or Shanghai Stock Exchange or a small decentralized crypto exchange like the Bit.Team DEX. Exchanges connect buyers with sellers. Many provide information and analysis to help traders make good trading decisions, and they make the actual trades as uncomplicated as possible.
But, at the end of the day, it is the trader who is responsible for the decisions made and for the gains and losses experienced. It is the trader’s responsibility to be knowledgeable enough about how markets and trading work.
According to the CFO of Bit.Team, Ruslan Musliev, the decision to create the Bit.Team decentralized exchange (DEX) was based on communication with thousands of people in the crypto community. Many were looking for a product that would “simultaneously solve the problem of ease of cryptocurrency circulation and, at the same time, retain the reliability and the possibility of its quick buying/selling”.
So, this article is intended to give some basic information about trading terms and also to describe some of the ways that the Bit-Team DEX promises to assist traders by making trading simple, secure and fast.
This article is a follow-up to a previous article, Crypto exchanges for beginners: How to sound like an expert. You can read it here.
Order books and how they work
An order book is an electronic ledger containing all outstanding orders — the instructions from traders to buy (a bid) or sell (an ask). The information is usually organized by price level. When a bid is matched with an ask, a trade happens.
An order book is dynamic, constantly being updated in real time. It is an aid to traders who can see who is buying and selling and what is the general direction of the market.
The order book is displayed graphically on the exchange’s website. Generally, the following elements can be seen:
· Buy orders
· Sell orders
· Price levels for both buy and sell orders
· Bid-ask spread, which is the difference between the highest bid and the lowest ask
· Total volume of the asset (eg Bitcoin) on the order book at that price level
· Cumulative volume of all orders between the current trading price and a given price level
· Order book depth or total quantity of orders. This shows the overall market intention to buy or to sell
· Potential support and resistance levels. A cluster of large buy orders at a specific price may indicate a level of support. A cluster of sell orders at a specific price may indicate a resistance level.
Understanding trading orders
As traders place their buy or sell orders on the order book, they will also issue specific instructions about how these orders should be executed. Previously, these instructions were executed by brokers, but now most are automated. Some of the basic ones are the following (with thanks to Investopedia for some of the explanations):
This is an instruction to buy or sell immediately, for the best available price. Orders currently on the books are matched as well as possible and traded immediately. There is no certainty about the exact price that will apply.
This is an instruction to buy a set number of assets at a specified price or better. You set the minimum or maximum price at which you are willing to buy or sell. Here, it might be necessary to wait until a suitable match comes onto the order book. Some exchanges will charge higher fees for limit orders.
This is an instruction to buy or sell if the asset reaches a particular price level. The order remains dormant until this level is reached, and then it is executed as a market order. This is usually a risk management tactic, for example indicating the maximum loss that the trader is prepared to take if the price drops.
All or none (AON) order
This is an instruction to get either the entire quantity of stock that you wanted or nothing at all. So, for example, if you want to buy 2,000 ABC coins at X price, this order will only be filled if the full 2,000 coins become available. If an amount of 1,000 coins comes up for sale, you would not have part of your order filled with this.
Good-till-cancelled (GTC) order:
This is an instruction to leave the order in place until it is filled, or you cancel it. Exchanges may set their own maximum time-limits on such orders so as not to clutter their order books.
This is an instruction for the order to expire at the end of the day if it is not filled. On traditional markets, this was typically the default position if a different instruction (eg GTC) was not given. This is, of course, a bit more complex in the crypto market which runs 24/7.
Choosing the right order
There really is no such thing as a “right” order. It depends on the circumstances and on what the trader wants to achieve.
A market order is probably better and cheaper for a long-term investor, where the exact price on the day may not matter as much as some other fundamentals and long-term trends.
A short-term trader, on the other hand, is more sensitive to the current price. A limit order to buy and a stop-loss order to sell would perhaps be best.
Which brings us to the need for a trader to have a trading strategy and to stick to it.
Mistakes to avoid
The biggest mistake is to trade on emotion rather than on analysis. The sheer volume of news reports and “expert forums” can exacerbate this. Traders get hooked into FUD (fear, uncertainty and doubt) or FOMO (fear of missing out).
Trading with the wrong tools can lead to actual losses or loss of opportunity. You can be stuck in an illiquid situation waiting for transactions to clear or to transfer your own funds from secure wallets. The ability to move quickly can sometimes be the difference between profit and loss.
Many traders read the charts incorrectly. For example, the top of the order book will show the highest price that someone is willing to buy for and the lowest price that someone is willing to sell for. This isn’t necessarily what you will be able to trade for, especially for large trades.
Defining a trading strategy
It is important to decide what type of trader you are — long term or short term, day or swing (ie holding positions for various periods).
Then you define some rules for yourself. This will include trading tools, criteria for what you would regard as a good trade, criteria for getting into a trade, market behavior signals, and so on. This is to ensure that there is some consistency in your trading and that you don’t get into a system-hopping mode.
Risk management includes answering some of the following questions:
· What is your average risk per trade?
· What is your max/min risk?
· How do you deal with correlated trades and risk?
· How do you deal with drawdowns?
· What is your hedging strategy?
Some parameters and routines should be set around setting targets, placing stops, exits, choosing moving averages, analyzing charts, selecting markets and so on.
All of this is to reduce noise, give focus and eliminate guesswork.
This is relatively basic information about trading, but it is complicated enough to make us realize why a really simple and easy approach might be a welcome change. And Bit.Team may be the platform to provide that.
What makes Bit.Team DEX a simple way to buy and sell?
Bit.Team is a new player in the DEX market. Its value proposition is that it provides a hybrid model which includes a peer-to-peer exchange of crypto-currencies, while the platform acts as a guarantor for each transaction. It is the first multi-currency P2P platform with the ability to automate the process of selling and buying cryptocurrency.
Transactions are guaranteed through a unique “blocked deposit” system. Cryptocurrency is blocked on the seller’s account until the buyer makes the payment, after which it is immediately transferred to the buyer’s account. The platform thus guarantees both the cryptocurrency and the payment. It also provides ratings and reviews about regular users to grow trading confidence.
Actual trading is very easy and is explained by Anastasia Leonova who is part of the Bit.Team management structure:
“When making a transaction on the Bit.Team platform, the user independently selects the most advantageous offer for him from the list, focusing on important parameters for him, such as price, seller or buyer rating, the amount of cryptocurrency. If the available options do not suit him, he can create his own ad, which other traders can choose.”
There are high levels of automation and focus on simplifying buying and selling operations to cut time and costs. This includes mobile trading apps and an automated trading robot app (easy BOT). Instant notifications will be available in various messenger apps. Further support is provided by an online chat tool to allow buyers and sellers to deal directly with each other, and a special builder tool that allows them to set up non-standard deals. It is possible for a trader to undertake a large number of trades in a short time.
Once traders have decided on trading strategies they can set their orders and leave the system to operate on their behalf. The easy BOT can interact with the bots of traders to ensure fulfillment of orders.
Access to the platform will be via the native BTT token. This is an ERC 20 standard token and will be used to pay for all transactions. A dedicated order book will list BTT token orders on the platform.
Leonova lists some of the competitive advantages:
· Users themselves determine the rate of buying or selling
· All information remains between the buyer and the seller
· There are no intermediaries and additional costs
· Traders’ rating warns against dishonest players
· Instant confirmation of payment transactions
· A wide range of convenient payment systems
· Guarantees of safe exchange
· Automatic reporting and notification of balances
Waiting for the launch of the Bit.Team DEX
The Bit.Team platform is in beta testing phase. The team is now working towards their ICO and the official platform launch before the end of the year. It will be interesting to see how well their ideas will resonate with potential investors and users.