Cryptocurrency trading is full of jargon, which, on first impressions can confuse people. One of the most frequented terms people struggle to understand is ‘Taker order’. In this guide, I’ll be exam-lining to you exactly what a taker order is in crypto trading and highlighting the pros and cons of this order.
What is a Taker Order? (Simple Definition)
A ‘Taker order’ is a type of order you can use on cryptocurrency exchanges which involves making a trade at market price rather than using a limit ‘maker’ order. Taker orders get their name as they ‘take’ liquidity (orders) from the order books.
Taker orders execute instantly since they take other peoples orders from the order book and most of the time, you have to pay more fees to place a taker order as you are decreasing the amount of liquidity on the exchange. The other main downside to using taker orders is that you won’t get the best price on the market since you are taking an ask rather than making your own bid. For example, if you want to buy 1 Bitcoin instantly, you’d have to do a taker (maker) order and you would pay the lowest price at which there are orders to sell Bitcoin for on the exchange you are using.
Should you use them at all?
Of course, there are some times in which taker orders are appropriate, but you should try to avoid them whenever possible to save money on trading fees and get a better trade entry price. The situations in which taker orders are handy are when price is going up/down quickly and you want to get in the trade and secondly, when you have to open/close the trade quickly as you don’t have the time to wait around for it to be filled (e.g before driving long distance or catching a flight) – sometimes a trade is too good to not take for the sake of a small fee.
How to use ‘Taker orders’
Taker orders are one of the most common order types when it comes to crypto exchanges and they’re really easy to use. All you have to do is log in to your exchange, go to the asset pair you want to trade (e.g BTC/USD) and then select ‘Market’ or ‘Taker’ on the main trading screen – they mean the same thing. After you’ve selected the order type, simply fill in the amount you want to buy and if you have the option, the highest price you want to pay for the asset. All that is left to do now is open the trade, there are usually big buttons saying either ‘Buy’ or ‘Sell’ (also referred to as ‘long’ and ‘short’.
I hope that’s cleared up taker orders for you, if you have any questions about this topic at all, please feel free to leave a comment below and I’ll get back to you with an answer as soon as I can!