Professional traders navigate the often-tricky backdrop of the market with skill and know-how gained from years on the job, and access to specialized tools and techniques. Nevertheless, occasional trading hiccups can attack even the most knowledgeable trader in the form of slippage and slow execution, especially when trading large amounts and institutional-scale position sizes.
The solution to these hazards is advanced order types that closely control buying and selling. In this way, institutional traders can ensure their orders are executed per their instructions, independent of position size, asset type, or market events.
Standard order types
Regardless of which asset is being traded, most trading platforms offer two general order types. Market orders, which are executed immediately irrespective of asset price, and standard Limit orders, which are guided by a precise asset price point with the caveat that they are not guaranteed to be filled (if that price is not reached). These are often sufficient for retail traders and those trading more modest sums. However, institutional-level traders, or those trading large positions, may desire additional mechanisms to protect their assets and control their trading.
Advanced order types on an advanced trading platform
eToroX, the advanced cryptocurrency trading exchange of eToro, offers professional traders institutional-grade solutions, including advanced order types to control their buying and selling.
Institutional traders, typically involved in a host of trading tasks from research to monitoring investments, can benefit from one often-overlooked advantage of limit orders: reducing workload. By setting up orders to your specifications in advance, you slash the time needed to monitor prices, creating more time to devote to other more attention-demanding trading responsibilities.
In addition to standard limit orders, eToroX offers several advanced limit orders including four time-in-force orders that let investors set the length of time an order stays active to give added control to trading.
Fill-or-Kill (FOK). A FOK order must either be executed immediately in its entirety at the specified price, or canceled completely. Though thought to be used in rare cases, it can be utilized when buying as well as when selling on eToroX. Traders might use an FOK order to reduce the risk of the market changing and moving against them before the order can be filled.
Immediate-or-Cancel (IOC). An IOC order is a limit order that is executed immediately but allows for the partial filling of the order. Any remainder not filled is cancelled. Traders might use an IOC order to gain as large a position at a specified price as possible, taking advantage of available liquidity, or to sell as large a position as possible. Much like the FOK, IOC orders are useful in preventing large trades from swaying the market.
Good-Til-Canceled (GTC). A GTC order is just as it sounds: it stays active until the trade can be executed or until it is cancelled manually. Traders often choose to use a GTC order when they have decided to buy or sell at a predetermined level some distance from the current price.
Good-Til-Date (GTD). A GTD order lets traders specify an expiration date for the order. Until then, the order remains active unless it is filled before reaching the GTD. Traders may choose a GTD order if they believe prices will change in the future, for example with a Fed announcement or other catalyst, and want to trade their position beforehand.
An Iceberg Order lets a trader buy or sell a large position without disclosing the total volume of the order at once, breaking down the order into smaller lots. When one small order gets filled, the next small quantity is executed. This can be useful when an institutional-grade trader is worried their order will spook the market or create volatility with the sudden change in supply and demand.
Iceberg orders can help protect the trades of institutional traders by reducing the possibility of others taking notice and trying to influence the success of the trade. Disruptions can occur when traders endeavour to get in on what they assume is your smart trade or attempt to block or confuse the market by placing orders at price points adjacent to your existing order.
Savvy professional traders utilize iceberg orders to protect their trading activity from others in the market who, if they detect movement, could try to short the asset to drive up the price before the trade can be filled.
While potentially advantageous for all assets, iceberg orders are particularly appropriate when trading a large volume of cryptocurrency as crypto trades can be monitored on public blockchains. A trader buying 300 bitcoin would break up their large order, for example, into smaller bitcoin buy orders, to keep the market in the dark about their planned purchase.
Advanced orders on an advanced trading exchange
By allowing institutional traders to minimize risk and maximize profit with advanced order types and by delivering a smooth and advanced trading experience, eToroX has become a trusted exchange for professional investors.
While most standard order types may cover basic trade execution needs, especially for retail traders, if your trading requires more control, nuance, and protection, advanced order types on eToroX may help you guide your institutional-grade cryptocurrency trading to success.