If you don’t know what limit orders are – you really should. There is hardly any better protection against sudden and intense market movements on the one hand and an easier way to acquire and sell your crypto the way that best suits you and your financial goals. It’s no secret that the crypto markets can be extremely volatile and pumps and dumps are our daily business. China and other FUDs come and go like seasons and it might be a good idea to leverage them, use them to your advantage – or – at the very least have a way to defend against them and take profits.
What’s the benefit of limit orders?
Setting limit orders means, you can buy and sell your crypto without sitting in front of your laptop or cell. You could be sleeping or taking a shower and you could still make gains or prevent losses. The great advantage of the crypto-space is that – unlike traditional legacy finance – you can set limit orders at whatever levels you please as most exchanges don’t have fixed limits. That means you could theoretically set a limit buy order for BTC to be as little as at $500 and even though it might not ever go through, it’s theoretically possible. This is a great way to catch very sudden and very heavy dips or pumps in the market, which is especially useful with very volatile, lower cap cryptos. Limit orders are also a very useful tool if you cannot tend to your portfolio for some time for reasons like going on a vacation. By setting limit orders in advance you’ll be all set no matter which way the market goes without having to stay glued to your screen. And it is also a great tool to stock up on coins “for cheap” if you have some patience.
What to keep in mind
Beware that the most important thing is to have a personal financial plan. That means you need to have a strategy in mind. For example: How much of which assets would you want to sell/buy at which price? It is also a good idea to use a portfolio tracker (for example the FTX mobile app, previously know as Blockfolio) that alerts you, whenever a certain price target was hit on the exchange you put your limit orders on, so that you get notified whenever a buy or sell limit order went through. However, you should regularly check in with your account in any case. Please also keep in mind that keeping your crypto on an exchange is a great way to prevent loss and take profits but the downside is that exchanges could get hacked, as hot wallets are never as safe as cold-storage (e.g. hardware wallets) – you know how the saying goes “not your keys, not your coins” (A. Antonopoulos). One way to mitigate this is to always take out profits and store them safely. Lastly, this isn’t financial advice and you always need to do your own thorough research!