Conditional buy is a sophisticated tool that allows traders to buy and sell a cryptocurrency, as well as set a limit for eventual losses, in the same operation.
What are the steps to do conditional buy?
- Register or login in Trade by Trade exchange platform
- Select your base coin and the cryptocurrency you want to exchange
In this tutorial base coin is bitcoin and the exchange currency is DASH
Image 2: Choose base coin and currency to be exchanged
- Select exchange in the top of the page
Image 3: “Exchange” screen
- Choose the buy order and after that “Conditional Buy”
Image 4: “Buy” option menu
Image 5: “Conditional Buy” option in “Buy” menu
How does it work?
Image 6: “Conditional Buy” Screen
Conditional buy is a combination of three features: one buy order, up to three sell orders and one stop limit order. When a trader believes a given cryptocurrency (cryptocurrency X) price will go up, he places a buy order for that cryptocurrency. He also can also place, conditionally, three sell orders at different price levels and a stop limit order, for the same amount of that cryptocurrency in one time.
Scenario 1 (the cryptocurrency X price goes up):
If trader’s buy order is satisfied and the bought cryptocurrency X price goes up, as expected, the system places automatically the defined sell orders, one of a time, when the previous order is satisfied. If all sell orders are satisfied, the operation is closes with profit and the stop limit will automatically be disactivated .
Scenario 2: (the cryptocurrency X price breaks)
If the buy order is satisfied and if, before all the sell orders for cryptocurrency X are satisfied, price drops, there’s a stop limit that when the price reaches a certain level, turns into a sell order and it will try to sell all units of cryptocurrency X at a given price defined previously by the trader, avoiding him/her to have greater losses, if cryptocurrency X price continues to drop.
Image 7: “Conditional Buy” screen filled with example
Imagine that you are a trader and you believe that DASH price will go up and current DASH Price is 0,039 BTC. You decide to place an order to buy 15 Dash at 0.04 BTC, and define that you want to sell 5 DASH if the price reaches 0.042 BTC, sell 5 DASH if price reaches 0.044 BTC and sell the remaining 5 DASH if price reaches 0.045 BTC. You also want to reduce your possible losses if market goes in opposite direction, so you place a stop limit order, with a stop of 0.038 BTC and a limit of 0.037 BTC.
Scenario 1 (DASH price goes up):
Imagine that the buy order you placed is satisfied and Dash price goes up as expected. Then, the system places the first sell order you defined – sell 5 DASH when the price reaches 0.042 BTC. The DASH price continues to go up and your first sell order is satisfied; then, the system places the second sell order, to sell the next 5 DASH at 0.044 BTC. The DASH price continues to go up and your second sell order is satisfied; then, the system places a third sell order, to sell the next 5 DASH at 0.045 BTC. The DASH price reaches that value and your third sell order is satisfied, the operation is closed with profit, and your stop limit order is automatically canceled.
Scenario 2 (DASH price breaks):
Imagine that the buy order you placed is satisfied and Dash price goes up. Then, the system places the first sell order you defined – sell 5 DASH if the price reaches 0.042 BTC. The price continues to go up, your first sell order is satisfied and the system places the second sell order, to sell the next 5 DASH at 0.044 BTC. However, DASH price starts to fall and after some time it reaches the stop that you defined at 0.038 BTC. The stop limit order now turns in a sell order for all your DASH at 0.037 BTC and all remaining sell orders are closed. If your order of selling your 15 DASH at 0.037 is satisfied, you avoid losing more, if DASH price continues to fall.
This tutorial is made in order to explain how to use some features in the platform. Fees were not considered in this tutorial, but will be considered in real operations – and you’ll be informed on it. Values that were used in this example are not the market real values – just dummy values we use for the example, and are not be used in your investment decisions.