How to use order types and access the Binance Spot wallet?

TutorialsOctober 14, 2021

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What is Spot Trading on Binance? When learning about cryptocurrency trading on Binance, you will see many tutorials related to spot trading and spot wallet… However, you don’t understand and distinguish what is spot trading method? It is different from other crypto trading methods on Binance. This article will guide you through the details of spot trading.

* See more: The complete guide Binance from a to z

1. What is spot trading?

Before learning about the concept of Spot trading, let’s take a look at a real-life example:

Your child has a lego set worth 500,000 VND. Your grandchild has 10 comic books, each worth 100,000 VND. Because both of them are tired of their stuff, so they decided to switch immediately. At that time, your child brought home 5 comic books. And your grandchild has 5 of his books and 1 set of lego just exchanged for your grandchild.

This is a real-life example of spot trading. The cryptocurrency market is similar.

Spot trading on Binance (spot trading) is a method of trading (buying or selling) one coin for another at a price at the time of your transaction. And through trades, you profit or lose from the difference between the buying and selling prices of the cryptocurrency pair at different times.

E.g.:

You trade the BTC/USDT cryptocurrency pair. The current market price of the BTC/USDT pair is 32000. That is 1 BTC = 32000 USDT. You have 32000 USDT in your wallet and want to buy 1 BTC. You do the following:

You choose the BTC/USDT pair and place an order to Buy BTC. Immediately, in your wallet, there is 1 BTC and no more USDT.

So you have done 1 spot transaction of BTC/USDT pair.

To profit from spot trading, when the market price rises to 1BTC = 35000 USDT. You execute a Sell BTC order. At that moment, your wallet will have 35000 USDT and no more BTC.

Thus, after 2 spot trades, you have a profit of 3000 USDT. (The example does not include transaction fees for your understanding).

P2P trading is the manual execution of buying and selling transactions between two users on the exchange, knowing who they are dealing with. Whereas Spot trading is when you perform an electronic order matching transaction, you only know at what price the order is executed, and you don’t know exactly who you are dealing with.

The spot market has a continuous order matching speed, so it has a much better level of liquidity than the P2P trading method. In addition, you can also preset the price you want to buy or sell, and the order will be automatically executed.

2. Spot orders on Binance

Spot trading is popular because there are different types of orders. Depending on the type of order, you will easily buy or sell coins at the desired price. To learn and know how to apply it in practice, here are the 4 types of spot orders on Binance:

  • Limit Orders
  • Market Order
  • Stop Limit Order
  • OCO order.

Limit order

This is an order to buy or sell cryptocurrency at a price that you have chosen. After entering the order, the order will be automatically filled when the market price reaches the price you set.

Example: Currently, the market price is at 1 BTC = 32000 USDT, and you have 35000 USDT. You enter a Buy BTC order with a limit order, setting the buy price at 30000 USDT. When the market price drops to 30000 USDT, the exchange will execute your order. Then you will have 1BTC and 5000 USDT in your spot wallet.

limit-spot - BINANCE

Market order (Market)

This is an order to buy (or sell) a coin at the current market price.

Example: The market is currently priced at 1 BTC = 32000 USDT. You have 35000 USDT in your spot wallet. You place an order to buy 1 BTC immediately in your spot wallet. There is 1 BTC and 3000USDT left (assuming the transaction fee is 0).

Stop-limit order (Stop-limit)

This type of order combines 2 orders, including a stop order and a limit order. When you place a stop-limit order, the limit order is immediately triggered if the market price reaches the stop price. With such a working principle, traders often use stop-limit orders as stop-loss orders in the cryptocurrency market.

Example: The market is currently priced at 1 BTC = 32000 USDT. You have 35000 USDT in your spot wallet. You place a stop-limit order. Buy 1 BTC at the stop price at 30000 USDT, and the limit price at 29000 USDT. When the market price drops to 30000, the pending limit order will be activated at 29000. When the market reaches the price of 29000, your wallet will have 1 BTC and 6000 USDT.

OCO Order

OCO stands for One Cancels the Other, which means an order to cancel the remaining order. OCO orders allow users to place two orders at the same time. OCO order is a combination of a stop order (stop) and stop-limit order (stop-limit). When 1 order is filled, the exchange will cancel the other order immediately.

Example: The market is currently priced at 1 BTC = 32000 USDT. You have 35000 USDT in your spot wallet. You place an OCO order Buy 1 BTC as follows:

Limit order: Price (the price of a limit order) at 33000 USDT. When the market reaches this price, the Buy BTC order at 33000 is immediately activated and cancels the stop-limit order.

Stop-limit order:  Stop at 31000USDT. At this price, the limit order of the stop-limit order is activated.
Limited at 30000USDT. At this price, the order to buy BTC at 30000 will be filled and at the same time cancel the limit order at 33000

3. Spot trading wallet on Binance

Spot wallet on Binance is a wallet to store the coins you use to trade spots. When you want to trade a spot, you must have a coin in your spot wallet. If your coins are in a P2P wallet, you must perform a transfer from a p2p wallet to a spot wallet before making a spot transaction. In addition, you can also deposit coins from other exchanges to Binance’s spot wallet and vice versa. Besides, if not trading, you can also store coins on a spot wallet.

See also: Instructions to transfer coins from Binance to another exchange and vice versa.

To access the spot wallet, do the following: Select “Wallet” on the dashboard, then continue to select Fiat and Spot.

At the Spot wallet interface, you can track the coin balance, perform transactions related to the spot wallet, and transfer to the interface of other wallets on the Binance exchange.

Conclusion

We have just learned about spot trading, how to type orders in spot trading and spot wallets. In the following articles, we will continue to learn about the features and other types of transactions on Binance.

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