Crypto Academy Week 15 - Homework Post for @yousafharoonkhan || Exchange Order Book

Hello everyone,

I am much grateful to participate in this week homework task by prof @yousafharoonkhan. The detail lesson on Order book was very comprehensive.

What is meant by order book and how crypto order book differs from our local market. explain with examples (answer must be written in own words, copy paste or from other source copy will be not accepted)

The term order book composed of two key words, Book and Order. Book is simply a written or printed meaningful statement. Order can also be term as a pre-notice of buy/sell of something by buyers and sellers. When we bring this two together we can simply say, an order book is one which has in it records of buy/sell placed by buyers and sellers.

In the world of crypto, order book means different, it is a book that has the pairs of Crypto asset with their prices which has been set by the trader. This book keeps records of all the desired data about which asset pair they are buying/selling, its quantity, and in what esteem they are buying/selling it, this esteem is given through transaction between the buyer and the vender of the item since it can cover distinctive agreed values. This order book has the buys and sells orders of all the traders who have placed an active trade in the market

A good example is when we always trade SBD for steem or vice versa (SBD/steem or steem/SBD). When we do SBD/steem trade in our steemit wallet, we always put an amount of SBD we want to negotiate for steem with a rate, this rate usually depends on the market price of these two assets. This order is kept in the order book till a buyer of same rate appears to accept this order.

Difference between cryptographic order book of our local market.

• In local markets, as they are not affected by price fluctuation, there's no got to stress around putting buy or sales orders, or performing price forecast analysis or applying hypotheses to decide the value of an asset.

• Traders can set an automatic execution of order books in crypto markets but isn't the same local markets.

• Local markets as it were give only a single exchanging alternative for the traders but the cryptocurrency order book gives a assortment of exchanging alternatives for traders, this includes stop-limit orders and OCO orders.

• In local markets the filling of the order books varies a lot since they are filled physically unlike the cryptocurrency order book that's filled automatically.

• Local markets don't include crypto trading sets. The traders regularly utilize a local money to purchase and sell their items.

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.(Answer must be written in own words)

• Pairs
• Support and Resistance
• Limit Order
• market order

To find the order book in the Binance exchange, follow the steps below.

The primary thing we must do to find the order book within the "Pair" of our choice through our trade, is to enter our personal trade, which in my case is Binance, once entered, we go to the "Markets" option.

A couple of things can be seen here, trading pairs and different markets like spot, futures and Zones will be seen. Select and click on Spot.

Select any trading pair you wish to look for. You can also search for desired pair. In my case I will choose DOGE/BTC pair.

After selecting your target pair, you will see beneath the chart graph order book for that particular pair in my case its it DOGE/BTC.

Trading pair

This referred to any two assets which can be trade for each other. This mostly done usind an exchange platform. Trading pair makes it easy to trade one currency to the other, for example, DOGE/BTC is a trading pair for which we can trade DOGE for BTC and can also trade BTC for DOGE. Trading pair can be in two ways, first, from cryptocurrency to cryptocurrency as in DOGE/BTC, and from cryptocurrency to fiat as in BTC/USD or vice versa. Not all cryptocurrencies can pair with each other when trading, for instance, steem can only be pair with ETH or BTC when trading.

Support and Resistance

Support level: this indicates the downward point on a price chart graph in which an asset price begins to rise again. When an asset price begins to rise after declining to a particular point then the support level has been achieved, at this point buyers place buys orders exceeding the sell orders.

Resistance level: this simple means an upward point on a price chart graph at which a particular asset price begins to fall. When market price of an asset is coming near this point, a trader can decide to sell the asset and make a profit than to hold which can lead to risk when drop.

Limit order
This is a type of purchase or sells order where the trader places an order using his or her price. The trader does not utilize the spot price or market price of the asset at that time. The price the trader is biding or selling the asset is different from the market price of the asset at that particular time. Example, assuming i want to sell 1 DOGE in market and at the time of placing order, market price of BTC was $0.43 but i was not pleased with this price, so i set my own price limit at $0.50. this order can only be possible when the price of the asset reaches my desire price.

Market order

In this type of buy or sell order, the price tag for the asset is existing in the market and traders are ready to purchase or sell the asset at that price. So these orders are quickly executed since buyer or vender needed to offer at a price which the other party on the other side is prepared to pay. Example, if the current price of ETH is $2,454.34 and I placed an order to purchase at same price, the order will be executed instantly.

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 (Answer must be written in own words).

Before I will go on to explain certain features of Order Book, I will first show you my verified profile as required by this question.

Features of order book

Order book as explained before contains buy/sell records of assets pair placed by traders. This order book consists of certain features which I will be explaining.

the screenshot above represents order book for DOGE/BTC. With this screenshot, the green represents buy orders of which traders who want to buy BTC using DOGE. The red part indicates a sell order of traders who want to sell their DOGE for BTC. All these are of difference prices set by different traders.

If any price placed by a trader is available in the market, the order book executes it and different orders take place. So the order book for a particular pair differs from time. The order book above is different from the one below but are all order book of DOGE/BTC of minutes difference.

I will illuatrate with screenshots on how to place a Buy and sell Order in spot market.

Buy Order

This means we have a cryptocurrency which we are will to trade for different cryptocurrency, so we first need to create a pair of our choice. As I said already, not all cryptocurrencies can be paired with each other. In my case I have steem as an asset which I will be trade for ETH. To do this, I first log into my binance wallet and select market of which I will search for the pair steem/ETH.

What appears afterwards is the details of my trade pair, percentage of the amount of steem to trade for ETH also appear. Also total available steem and amount of BTC in return.

As seen on the screenshot, I have used 100% of my steem which is equivalent to 45 steem and in return I am getting 0.0109035 ETH. After I am satisfied with the order, I will then tab on the Sell steem option.

As seen on the screenshot above the order has been successfully placed

Buy Order

This means you get some cryptocurrency that you want for trading in exchange for other cryptocurrencies or fiat. In this case too I am using the steem/ETH pair. This like the sell order but here we are trading ETH for steem. We follow the same procedure till where we select sell option, there we select buy option.

What appears afterwards is the details of my trade pair, percentage of the amount of ETH to trade for steem also appear. Also total available ETH and amount of steem in return.

As seen on the screenshot, I have used 100% of my ETH which is equivalent to 0.0108926 ETH and in return I am getting 43.69 steem. After I am satisfied with the order, I will then tab on the Buy steem option.

As seen on the screenshot above, the buy order has been placed.

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.(Answer must be written in own words)

Stop limit order consists of both stop loss and a limit order, traders use this order type to minizine any great losses during trading.

Stop limit order involves the use of two market prices to place an order.

Stop price: This is the start of the target price of the asset.

Limit price: this is also set to be lower than the target price.

How to place stop - limit orders.

Login to your Binance account and click on market and select the pair to be traded. Beneath the buy and sell option there is another option Limit, click on it and a pop up menu appear of which you will select stop limit from the menu.

Buy stop limit order

I will show how to place a buy stop limit order for steem

I set stop price at 0.0002948 (steem/ETH) and limit price at 0.0002626 (steen/ETH) . Once price of ETH reaches stop price, our order will become limit order and will be executed at limit price.

Sell stop - limit order

I will show how to place a sell stop limit order for steem

I set stop price at 0.0002995 (steem/ETH) and limit price at 0.0002428 (steen/ETH) . Once price of ETH reaches stop price, our order will become limit order and will be executed at limit price.

How to place buy and sell order in OCO.

One - cancels - the-other - order - OCO is a pair of orders which one is canceled if the other is executed. For a practical example, if a limit and stop-limit order are placed at the same time and the limit order gets executed, then automatically the stop limit will be canceled. Likewise, the limit order will be automatically canceled if the stop-limit order is executed.

Login to your Binance account and click on market and select the pair to be traded. Beneath the buy and sell option there is another option limit, click on it and a pop up menu appear of which you will OCO from the menu.

I will be using steem/ETH pair for this illustration. I set my limit order at 0.0002393 and stop-limit at 0.0002405 and limit price at 0.267.

Assuming the market price of steem goes up and touches 0.267, so it passes limit order and gets executed. The stop limit order will be cancelled automatically. If the price of asset goes down and touch the stop price of stop limit order, the stop limit order will become limit order and will be executed at its limit price. Limit order will be cancelled by default.

Same thing happen to Sell order of OCO.

How order book help in trading to gain profit and protect from loss? share technical view point, that help to explore the answer (answer should be written in own words that show your experience and understanding)

order book provides an option in which traders set their own market price and nagotiate with others to suit their target price, this help in making profit.

The order book makes a difference to keep track of the history of any exchange done on the platform. This helps to know the price of the currencies you bought to HOLD without having to offer them at a low price.

It helps creat a support and resistance level to enter the market when market price decreases and exit the market when market price goes up. for instance, when an asset price is $10, you can make profit by entering the market and set your resistance to $10 and stop limit to $10.2 of which you can gain profit. For buy option, you can set your support at $10 and your limit at $9.5, when priceattain $10 you then enter the market and when price reaches $9.5 you exit the market.

It also shows the volume of each crypto pair and giving more information on the fluctuation level of the asset. This is useful since it helps the trader to make quick and right decisions before entering the market.

The order book presents a channel through which a crypto trader can rapidly check out the chat of a crypto pair. In this case, indeed when the market for the crypto is unstable, a few benefits have been made and the chart recommends or demonstrates that it is progressing to be more unstable, one can work out a small persistence and hold up a small longer to offer when the price goes higher.

CONCLUSION

Order book is very essential when it comes to cryptocurrency trading. it keeps records of all the current trade made with different rates, this help traders to know the kind of rate to enter the market with. the stop limit order too help traders to set their resistance an support to benefit from price fluctuations.