Steemit cryptoacademy:- season 2 week 7:- Home work post for professor @yousafharoonkhan:-

Hey there everyone, this is @prakhar9675 this side and this post is against the home work given by professor @yousafharoonkhan.

So let's answer all the asked questions:-

What is meant by order book and how crypto order book differs from our local market. explain with examples

As the name suggests, order book is the book that contains a list of orders that are not executed yet. It shows the different offer that are shown by any buyer or seller. In which buyer or seller places orders or you can say offers their offer at different rates.

In any order book, only those order are kept that are not executed. As soon as the order is completed, it moves from order book.

In order book, records are put on the basis of their price. And if anyone offers the same deal, it just added to that
For example, if I place a order that I want to buy 100 steem at a price of 50 INR. And if someone else place a order that he wants to buy 1000 steem at a price of 50 INR, then instead of showing it as another order, order book will simply show that 1100 steem are ready to be bought at a price of 50 INR.
And as this information is publicly available, one can easily see which price is currently most popular among traders.

In local order book, all orders are kept into a same book but in cryptocurrency world, order book is slightly different. In that all records of orders are kept there in pair. Such as steem/btc order record are kept seperately than steem/eth or steem/BNB record. These can be called section. So we can say that in crypto World all orders are kept into different sections that are made on the basis of their pairs

In order book of crypto and order book of local market has many differences.

Whenever we go to any local market, different shopkeeper offers us their different price and for cryptocurrency, we go to different crypto platform and there many people offers their price as per their convenience. This is similarity, but the difference is that in local market we get a chance to negotiate with the shopkeeper as per our interest ( although final price depends on shopkeeper), but In cryptocurrency trading, we don't get any chance for the same. There are only two chances for us. Either you want to buy at this price or not. You can negotiate with other side.

In cryptocurrency world, price is reconsidered every minute and market is open for 24 hours so a trader has to adjust his order book as per this arrangement. And in cryptocurrency world mostly trades is done in pairs. For example, BTC/USDT pair, steem/btc pair.
But in contrast, in local market, price is considered mostly on a daily basis. If not on daily basis, then this period is usually not too short.

In cryptocurrency world, trade is done in pairs but in local market trade is done using physical currency mostly. For example in local market in india we trade using Indian rupees.

In local market, price is mostly decided by sellers and buyers can negotiate only. And In cryptocurrency market, price is determined by seller at what price he wants to sell but in ghis case, no chance of negotiations can be availed by buyer. Although in both of cases, final trade occurs when both parties are ready to trade.

As crypto World is highly volatile so many trader set their price in multiple folds. As we can observe recently the price of steem backed dollar increased by leaps and bounds. So to avail this opportunity, mostly trader set their price In multiple folds.
On the other hand, in local order book, as the price doesn't fluctuate much in a short period of time, seller set it's price in a single fold.

Along with this there are many other difference as no automatic execution of orders in local market, not many types of orders such as stop limit order, OCO,.

Explain how to find order book in any exchange through screenshot and also describe every step with text and also explain the words that are given below

Support and Resistance
Limit Order
market order

There are many cryptocurrency plateform out there to trade. But as I have only one right now with verified account. That is binance. So in this section I will show how to find order book in binance app

1. First of all go to binance app and log in into your account. And you will see a interface like given below. And there is a panel with option. There click on market
   

2. After clicking on this, you will see the curser is on spot by default. If it's not then click on this and in search box search for your cryptocurrency for which you want to see order book
   For example I have only steem in ample quantity into my account. So I am opting for steem.
   

3. Now you will see many pairs of a cryptocurrency. The more popular is cryptocurrency, the more pairs you will see here
   Here are only two pairs for steem. I am clicking on steem/btc pair.
   

4. After this, scroll down and you will see a section stating order book. And this is the order book for steem/btc pair.
   

Pairs:- as the name suggests, this is the pair of two cryptocurrencies sticked together on a trading platform. And these both cryptocurrencies can be traded for each other by a trader.

These pairs can very from platform to platform. A pair you are convenient with may be found on a platform but is unavailable on another.

For example, in case of steem, steem/USDT pair can be found on huobi exchange, but it's unavailable on binance exchange.

The more popular a cryptocurrency is, the more pairs can be found on a exchange.

Support and Resistance:-

As we know that cryptocurrency is highly volatile, and it's price can change within hours. But when we observe closely we can see, that price of almost every cryptocurrency varies within a area.

So when a cryptocurrency started to rise, there is a point where this rise in price is expected to stop. That point can be described as resistance of that cryptocurrency.
Once a cryptocurrency breaks it's resistance, it is expected that then the price of that cryptocurrency will reach at a very high point.

For example, in the given photo you can see the resistance of steem/btc pair.

^{resistance for steem/BTC pair}

Similarly, support can be described as, when the price of any cryptocurrency starts to fell, then support can se described as a point where the fall in price is expected to stop and after this price is expected to rise.
For traders, it is very important. As by looking as this, many trader determine a perfect entry point to invest into a market as at support price the price of s cryptocurrency is near to its minimum price (as expected but it's price may fall further)

^{support for steem/btc pair}

So in a nutshell we can say that resistance and support are the point where uptrend and downtrend respectively in a cryptocurrency is expected to Stop.

Limit Order

To avail the opportunity of volatile nature of crypto market, many trader set the price of any asset at a price that is Different from spot price or current price at exchange.
So when the price of the asset reaches that point, the order is executed automatically.

For example, the current price of steem is nearly 50 INR. And I am making assumption that this price will cross 70 INR in night but for a very short period of time.
Then to sell my steem at that price I can set limit order to that price. And whenever the price of steem reaches 70 INR, my steem will be sold automatically.
And thus to avail this opportunity I need not to sir in front of computer screen for whole time.

Similar thing can be done when market is falling and I want to buy any asset on a price lower than current price then I can set limit order for the same too.

But the problem with limit order is that it may take time to be executed or the price of that asset reaches near to your expected price but never reached to that and your order may not be executed

Market order:- in this type of order, a trader set the price of any asset to the current Price of the asset.

As the price set by trader is equal to the market price, these types of orders bare executed instantly unlike limit order.

But the bad thing About it is that by using it you will have to look for market price for a long time to use the volatility of market but the good thing is that by using it one can sell its asset instantly if the market is at maximum and is going to fall.

Explain the important future of order book with the help of screenshot. In the meantime, a screenshot of your exchange account verified profile should appear

First of all I am sharing a screenshot of my binance account. By looking at it you can see that I am a verified binance account holder.

Earlier we discussed about how to access order book for every pair available on binance.

In this section, I will discuss about what are the features of the order book.

^{order book of steem/btc pair}

Order book gave a trader much information about any pair. For example, current price, market cap, and total circulation.

In the above screenshot, you can see two types of orders. One is buy orders in green and other one is sell order in red.
Along with every order you can see number written these are the price for a unit volume of the asset at which asset is being bought or sold.

This order book is dynamic in nature as we discussed that a order remains in order book until it is executed. So when a order is executed, it's removed from the order book.

So when we see an order in order book we might not see that order after some time

A trader can see various information regarding any asset using order book.
For example I am sharing a screenshot of steem/btc pair containing it's information.

How to place Buy and Sell orders in Stop-limit trade and OCO ,? explain through screenshots with verified exchange account. you can use any verified exchange account

Before understanding how to place a stop limit orders let's understand what it is?

Stop limit order is a type of order by using which a trader can limit it's loss and lock it's profit.

In Stop limit order we have to set two price that are

1. Stop price:- at this price, a stop limit order is converted into limit order and as soon as the order is reached at limit price z order is executed.

2. Limit price:- at this price, the order is likely to get executed.

So in Stop limit order, when the price is reached to stop price, them limit order is triggered.

How it helps in limiting loss:-

In this section we will hypothetically see how stop limit order helps in limiting loss and locking profit.

Now let's suppose, you buy any asset at a price of 100 USD. And when you were asleep the price of the asset is decreased and it reaches 90 USD.
So you suffer loss of 10 USD.

Now let's assume to prevent this you place a stop order at 90 USD. As soon as the price will reach 90 USD, the order will be executed.

So when you were asleep, the price of the asset reaches 90 USD and your order is executed. But in the same night it got recover and it reaches 95 USD. But you had placed order for 90 USD and your order is executed. So still you are in loss.

Now let's understand what if you place an Stop limit order

Now suppose, I place an Stop limit order with stop price of 90 USD and limit price at 94 USD.

So when I was asleep and market price is dropped to 90 USD, my stop limit order is converted into limit order with the price at 94 USD

So when the market was recovering and it touches 94 USD, my order was executed. Thus my asset was sold at 94 USD.

In this way, I was still in loss but the loss was limited by Stop limit order

How to place an Stop limit order to buy asset on binance:-

In this section, I will demonstrate how to place an Stop limit order to buy steem from steem/BTC pair:-

1. First of all, go to steem/BTC pair and click on buy
   

2. Now you will see many options for placing order. Click on Stop limit order
   

3. Fill the stop price and limit price according to your interest and amount of steem you want to buy.
   

After all this, click on buy steem and your order will be placed.

To place a sell stop limit order:-

1. Go to the desired pair. For example I am choosing steem/btc pair.

2. Click on sell.
   

3. By clicking on limit, click on Stop limit and them fill desirable stop price and limit price and amount of steem you want to sell.
   

4. After this, click on sell and your order will be placed.

How to place buy sell order in OCO.

OCO stands for one cancels the other. This gives us opportunity to place two order for the same asset. And by doing this we can minimise the loss and risk and by selling asset at high price to maximize the profit.

For example, by using OCO, I can place two order and I placed stop limit and limit order for the same asset.

When stop limit order is executed, limit order is cancelled and vice versa.

Let's understand how these orders are placed on Binance

To place a buy order:-

1. Open binance app and go to your desirable pair. For example I am placing order on steem/BTC pair.
   And then click on buy
   

2. After this, click on types of orders and click on OCO
   

3. Then set your desirable price in limit price, stop price and limit price and fill the amount you want to buy and then click on buy.
   

To place a sell OCO order:-

1. Go to your desirable pair. For example I am opting for steem/BTC pair and then click on sell
   

2. Now click on types of orders and click on OCO.
   

3. Now fill all the desirable prices for limit order and stop limit order. And then fill the amount you want to sell. And then click on sell
   

If any one of the limit order or stop limit order is executed, other one is cancelled automatically. By using this type of order, a trader can earn maximum profit and can minimise the loss.

How order book help in trading to gain profit and protect from loss? share technical view point, that help to explore the answer

In this lecture we all discussed many types of orders. Such as limit order, market order, stop limit order, and OCO or one cancels the other order. Each of them has its own advantages.

Let's discuss each of them.

Market order is for such situations when you see that their is a sudden increase or decrease in price of a asset. And you want to buy or sell respectively, your asset to make profit. In that case Market order is perfect. Because it is executed on market price and are executed instantly. Thus without any delay a trader can buy or sell any asset.

Limit order is for such situations, when you can't sit infront of your computer or phone whole day and night but you know that the price of any particular asset will go up or go down and you want to avail that opportunity.
In this case a trader can set the price at which the order will be executed automatically and you need not to look at the price for the whole day.

Stop limit order is for such situations when the price of any asset fluctuate suddenly and then it is used to minimize the loss but in this case profit is also less and there is no guarantee that your order will be executed or not.
We have discussed it deliberately above.

OCO is used to get maximum profit and reduce the loss to the minimum. In this if you predict that the price will go up then to avail this opportunity you can set limit order.
And if the price is dropped then to minimise your loss you can set stop limit order simultaneously. If one of them is executed, the other one is cancelled automatically.

But all of these order can be made for maximum profit only when a trader has knowledge about support and resistance and can predict the price.

Along with this, by using order book, one can easily see information about many asset and ghis helps in choosing the right asset to invest into as the trading volume of the asset should not be less.

And by observing the order book one can easily estimate the resistance and support even if he doesn't know much about it.

When you see a point at which much buy trades orders are placed, one can estimate that it can be support price as it is the right time to invest and many traders uses this point to invest.

And when you see a point on which many sell orders are placed, you can Estimate that this might be resistance and thus the price of the asset is likely to drop.

Thus by using order book, a person can get information about any asset and then can see whether it is the right time to invest. And then afger investing one can determine when to sell that asset. And by using various order types one can minimise the risk of loss and maximize the profit.

Thus in a nutshell we can conclude that order book helps trader to minimise risk of loss and maximize the profit.

conclusion

Thus in this lecture we came to know that order book is a powerful tool that looks ordinary, to make profit. And even a newbie can make profit or atleast minimize the risk of loss by using order book.

Cc

@steemcurator01
@steemcurator02
@yousafharoonkhan
@stream4u