NEVER BUY ON ROUND NUMBERS

This post will be relatively technical, but it will teach you a lot and help you greatly in understanding the market. Read it carefully and re-read it if you are not clear on everything.

Many of you probably use “limit” orders to buy or sell your cryptocurrencies. For those who don’t know, “limit” orders are orders that allow you to automatically buy or sell at a certain price. For example, if you want to sell 1 BTC at $68,500, you place a limit sell order at $68,500 and it will automatically sell your BTC when it reaches that price.

But what you need to understand is that you should never place limit orders on round numbers like $70,000, $75,000 or even $75,500. When you do this, you are doing what a lot of people do, which is placing orders at key psychological levels and therefore, at these levels there are a lot of people selling. This means that your order is drowned among thousands of other orders and therefore much more money is needed to fill your order.

For example: imagine that there are 1,000 BTC for sale at $70,000. This means that 1,000 BTC need to be bought from these people to fill all orders. However, 1,000 BTC, for many people: there is very little chance that there are 1,000 BTC available to buy at this level. Now imagine that you place your order for $69,999: this does not change anything for you, however, you will not be drowned among all other orders and therefore you will have a much higher chance of your order being filled.

Obviously, this works for all cryptocurrencies and any round number.

Feel free to ask your questions in the comments if it is not clear enough.

This post represents my personal views.

Thanks for reading.

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