When placing an order through the "Trading" page on Shrimpy, you might notice that there are options to either buy or sell an asset. These options are displayed side-by-side in the middle of the screen at the bottom. You can see this in the image below.
In this example, we will buy Bitcoin from USDT. Since USDT is the quote currency in this case, we will want to input the price of Bitcoin in terms of USDT and input the Amount in terms of BTC. As a result, buying Bitcoin from USDT would look something like the following.
Notice how the "Total" is automatically calculated based on the price and the amount we will trade. This is the amount of USDT that you will trade for the Bitcoin. In this case, you will be trading 292.9335 USDT for 0.03 Bitcoin. The price of the Bitcoin is exactly 9764.45 USDT for 1 full Bitcoin.
Similar to buying Bitcoin, we can sell Bitcoin for USDT. Since USDT is still the quote currency in this case, we will be inputting the sale price of BTC in terms of USDT. However, the amount we want to sell will still be in terms of Bitcoin. This would look something like the following.
Notice that the "Total" amount is still calculated automatically. In this case, we will be selling 0.03 BTC for 292.9638 USDT. The sale price for our trade would be exactly 9765.46 USDT for a full BTC.
Selecting a Trade Price
Before we place our trade to buy or sell an asset, we must first understand how the order book works. This is important when picking the price that you want to set for your trade.
The BTC / USDT order book is shown in the image below.
When we place an order on the exchange, we have two options. Either we can place an open order on the exchange for someone else to take or we can take someone else’s open order that is already available on the exchange.
The above order book shows the available open orders for the BTC/USDT trading pair. If we wanted to buy Bitcoin, we could use this order book to trade USDT for Bitcoin.
In this order book, we can see the current lowest price that someone is willing to sell Bitcoin is 9831.19 USDT. At the same time, the highest price someone is willing to buy Bitcoin is 9831.05 USDT. That amounts to a difference of 14 cents.
The small gap between the lowest selling price and the highest buying price is called the spread. This spread is labeled in between the two order books.
When we decide to buy Bitcoin, we can either place an open order on the buy side (green text) or take the best offer on the sell side (red text). Since the best offer on the sell side is 9831.19 USDT, we can instantly take that available offer to get Bitcoin.
Otherwise, we would need to place an open order for less than or equal to 9831.05 USDT on the buy side. These open orders would need to wait until someone else agrees to sell at the open order price. There is no guarantee someone else will ever agree to sell at the open order price, so we don’t know how long it will be until we get our Bitcoin.
Typically, exchanges charge higher fees for traders who take orders (acting as a taker) rather than place open orders for others to take (acting as a maker). The reason for exchanges charging higher fees for being a taker is because it removes liquidity from the trading pair, where acting as a maker increases the liquidity of a trading pair.
A patient trader may be more interested in reducing fees by placing open orders, while an opportunistic trader may want to take advantage of market opportunities by executing trades quickly, even if the fees are higher.
Have questions, comments or concerns? Feel free to reach out to us via the blue "Support" button found in the bottom left corner of your Dashboard, or send an email to Support@Shrimpy.io.