The take profit limit order is a type of limit order that allows traders to set a target profit price at which a limit order is triggered that seeks to buy or sell assets maximizing the profit obtained.
Basically, this type of order consists of two parts:
- A take profit price. This price is chose by the trader. This price aims to be the trigger of a limit order in the market. A order that will be sent to the market. This order will be filled when the price level of the limit order is met.
- A limit order, which is the one that allows us to buy or sell the asset.
The objective of this type of orders is:
- If you want to sell, the take profit value should be high. In this case, create a limit order a little lower and thus, the order is executed as quickly as possible. This is useful if you want to fill an order quickly, when you have a spot or leveraged position.
- If you want to buy, the take profit value should be low. In this case, create limit order a little higher, and that the generated limit order is fill and allows you to enter the market. This is useful if you notice that an uptrend is coming in the chosen price range.
Take Profit vs Limit Order. Which one to choose and how to use it?
Choosing between a Take Profit or Limit Order will depend on “How much risk do you want in your operations?”. In a Take Profit order, the fact of using a value as a marker to generate the limit order, gives you the option to perform a market analysis. And, only if the expected conditions are met, you enter a trade with a limit order. In any case, the flexibility of the Take Profit is in deciding the price range in which you want to trade. Additionally, the Take Profit guarantees that all the volume of the operation both in buying or selling will be realized.
However, the Limit Order at this point is more limited, leading you to decide directly on the price of action. This limits your range of action and in case of mistakes, can lead to losses in your performance in the market, because the complete execution of the order is not guaranteed.
In any case, keep in mind the following about take profit:
- Buy orders are place with a take profit price below the market price. This orders are a good option to make entries with future profits.
- Sell orders are place with a take profit above the market price. In this case, this orders are the best option to exit with profits.
- In both cases keep an eye on the limit order prices to maximize the profits of the trade.
How to use this order in Atani?
Using a take profit limit order at Atani is a simple task. First of all, this type of order has a very wide support in different exchanges, in fact, most of them offer support for this order. That said, it is enough to select an exchange in Atani with that capability to be able to use this order.
Buy and Sell using take profit limit order in Atani
In this case, we will use Coinbase Pro. Although, the process is exactly the same for any other type of exchange. Once you have chosen the exchange, you must go to the trading form. There you must select the option “Take Profit Limit“, which will allow you to use this type of orders. In this option you will find the following data entries:
- Limit, is the price that will be used in the creation of the limit order.
- Take Profit, is the price that will be use as a marker to initiate the profit operation. This execute the limit order associated to our take profit limit order.
- Total, where the total value of the purchase or sale in USD.
To make the most effective use of this type of orders, you should evaluate a take profit value according to the operation you are carrying out. For example, if you plan an entry you should choose a low price to accompany the limit order with a slightly higher price.
The idea of this strategy is that the limit order is complete smoothly and you make a full entry. The opposite case applies if you go on exit. In this case, where the take profit value is higher and the limit order is in a lower price range.
In this example, we are making a sale of our holdings in LINK, to take them into ETH, with a 5% gain on the sale. As a result, our take profit limit order would bring us a profit of $5 on the balance we have in LINK (approx. $114 in LINK tokens).
The same procedure can be use to buy a given token, always taking care to follow the conditions for executing the operation.
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