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# System prepended metadata

title: Cryptocurrency & Trading Foundational Knowledge

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# Cryptocurrency & Trading Foundational Knowledge

## What is Trading
## What is Crypto	
## What are Exchanges	
## Basic Charting / TradingView	
## Long & Short	
## Spot & Derivates	
## Order Type

Choosing the right order type is crucial in trading as it directly impacts execution price, timing, risk management, trade automation, and personal trading style. The order type determines whether you prioritize immediate execution or a specific price, enables strategic entry and exit points, manages risk through stop orders or trailing stops, facilitates automated trading strategies, and aligns with your individual trading preferences. Making informed decisions about order types helps optimize execution outcomes, adapt to market conditions, and achieve trading objectives effectively.

- **Market order**
    - A market order is used to buy or sell a stock at the current best available price.
    - Market orders prioritize execution over obtaining a specific price.
    - They are suitable when the primary goal is immediate trade execution.
    - Market orders are appropriate when the stock is perceived to be correctly priced, when a fill on the order is desired, or when an immediate execution is preferred.
    - The highest bid and lowest offer in a stock's quote are more important than the last trade price when placing a market order.
    - In less-liquid stocks or fast-moving markets, the last trade price may not accurately reflect the current price.
    - Market orders should generally be placed when the market is open to avoid potential gaps in price at the next market open.
    - Factors such as earnings releases, company news, economic data, or unexpected events can impact stock prices between market sessions.
- **Limit order**
    - Limit orders allow you to buy or sell a stock with a specified maximum (buy limit) or minimum (sell limit) price.
    - Market orders prioritize immediate execution at the current market price, while limit orders aim to execute at the specified limit price or better.
    - Limit orders may be suitable when you believe you can buy below or sell above the current quote.
    - The use of market orders versus limit orders can be illustrated through a stock price box and whisker plot.
    - A market order ensures quick execution at or near the current price, while a buy limit order is triggered if the stock drops to the specified limit price, and a sell limit order is triggered if the stock rises to the limit price.
    - It's important to note that even if the stock reaches the limit price, execution is not guaranteed as there may be other orders ahead of yours.
    - Limit orders can be filled at a better price than the specified limit, such as executing below the buy limit or above the sell limit.
    - Timing options for limit orders include day-only, good till canceled (GTC), day + extended hours, GTC + extended hours, extended-hours AM (Ext. AM), and extended-hours PM (Ext. PM).
    - Each timing option determines the duration and availability of the limit order during regular trading hours and extended-hours sessions.
- **Stop order**
    - A stop order is an order to buy or sell a stock at the market price once it reaches a specified stop price.
    - A sell stop order is placed below the current market price, while a buy stop order is placed above it.
    - Stop orders can be used to protect gains or limit losses in a stock position.
    - When a stop order is triggered, it becomes a market order and is executed at the next available price, which may differ from the stop price.
    - Stop orders are not guaranteed to execute at the exact stop price, especially in cases of price gaps.
    - Price gaps occur when a stock's price makes a significant move without trading occurring in between, often due to news or events outside of trading hours.
    - Gaps can affect the execution price of stop orders, potentially leading to unexpected outcomes.
    - Limit orders, on the other hand, are only executed at the specified limit price or better and can benefit from price gaps in the desired direction.