Those who are new to trading and investing might turn nauseous when they first see a trading terminal. Flashy buttons, constantly changing numbers, and tons of tiny buttons can all lead to disorientation. This can scare traders away who fear that they might mess up an order and lose all of their money.
Have no fear. In this article, I’m showing you how to use a crypto trading terminal and execute your first trade. I’ll show you the building blocks of a trading terminal and explain basic order types and how they work. You should have the knowledge needed to easily execute trades by the end of this article.
What Is a Trading Terminal?
A trading terminal is a part of an exchange where you execute buy and sell orders. The terminal is an interface that lets you interact with an exchange’s order book by placing orders. Besides placing buy/sell orders, you can also place other types of supporting orders such as: stop loss, take profit, trailing stop loss, etc.
The point of a trading terminal is to trade assets, view their performance, see open orders made by other users, and analyze the asset. Trading terminals can be as simple as token swaps or converters (where you exchange token A for token B) or as complicated as trading interfaces where you trade spot, margin or futures and place advanced orders.
The Anatomy of a Trading Terminal
Trading terminals comprise of four important parts:
Asset price data
The order book is a record of active buy and sell orders that users place for a trading pair. Exchanges utilize a matching engine to determine which orders can be filled partially or fully. You can see the order book on the left part of the image below.
In the middle is the price chart. Exchanges have personal charts managed by themselves, but you’ll often find a Tradingview version of the chart on many exchanges – including Binance. The price chart shows historical price data by visualizing price in the form of candlesticks.
At the very top you’ll find the trading pair and its market information. This tab shows basic price information such as: current asset price, daily trading volume, and daily price change.
At the very bottom of a trading terminal you’ll find a trade history tab. This tab shows currently open orders, order history, and trade history. Here you can examine previous trading activity and manage your open trades or trading positions.
Placing an order
Last but not least, you have the trading terminal itself. The terminal is distinguished by a set of levers and buttons which allow you to set the amount of a token you’ll buy or sell and the price at which you’ll do so.
In Binance’s example, the terminal has three main tabs: spot, cross, and isolated. The latter two are used to margin trade, while the spot tab is used to trade spot without leverage.
You can submit multiple types of trade orders. The most common trade orders are limit and market orders. Some traders prefer to place more advanced orders such as stop-limit and trailing stop orders. These advanced orders have a stop in place which will open a trade in the opposite direction.
For example, if I buy Bitcoin at $22,000 I can place a stop order at $21,000. The exchange will sell my assets once the price reaches $21,000 and prevent me from suffering further losses. But let’s stop for a moment and get back to the basic orders.
A limit order is an order type where you choose the price at which you want to buy or sell. An example would be buying Ethereum at $808 for $5,000. Limit orders are great for trading cryptocurrencies at attractive price levels that are not here yet.
A market order is an order type where you only select the amount for your order. I place an order for a selected amount and the exchange buys or sells my cryptocurrency at the latest market price. Market orders are good for buying cryptocurrencies instantly. However, I don’t recommend trading large sizes with market orders due to high slippage.
Once you insert the price and amount, you can click the buy or sell order. The order will execute instantly if using market orders. But if you used a limit order, the trade will appear in the trade history tab until filled.
Trading Terminals on Decentralized Exchanges (DEXs)
The situation is different on decentralized exchanges. Their trading terminals are different in terms of both visual and technical design due to the fact that DEXs do not use order books.
DEXs rely on liquidity pools which contain equal amounts of two cryptocurrencies (A and B). These assets have a smart contract containing tokens of both assets, thus forming a trading pair. The liquidity pool functions with the help of traders who place as much of token A as they take of token B (in dollar value) – which is why users refer to DEX trading as token swaps.
Token swaps are fairly simple. You have one asset and you want to trade it for another. The equivalent of trading BTC/USDT on a DEX such as Uniswap would be trading USDT for BTC. You input the number of tokens you wish to trade, confirm the trade, and confirm a transaction on your personal wallet.
DEX trading terminals are minimalistic and lack most features found on CEXs. The DEX interface only contains a trading terminal where you swap tokens. However, some DEXs also feature charts.
You can tell by now that the limitation of token swapping is that you’re only allowed to place market orders. You’re unable to place limit orders. You can only swap tokens at their current exchange rate. However, there are DEXs that have an on-chain order book. This allows you to trade crypto just like you would on a CEX.
Popular examples of decentralized exchanges with order books include Raydium and DEXLabs.
Besides the trading terminal and order book, another important difference is that DEXs require no accounts. You can directly connect to a DEX via a wallet and execute trades without conducting KYC. This leads to a more decentralized trading experience. However, DEX traders are more susceptible to hacks and phishing attacks.
Trading terminals look scary at first. But after having dissected a large interface and explored each nook and cranny, you have discovered that they’re not as complicated as you first thought. It takes only a few minutes to get comfortable with a trading terminal – after which you’ll feel like you’re at home.
Here at Shrimpy, we aim to make trading as simple as possible. You can trade cryptocurrencies in just three steps. Let me show you just how easy it is.
Starting from the trading tab, you have a list of popular assets to choose from.
Select the asset you want to trade and you’ll land right at a trading interface. After having clicked Bitcon, I can already see BTC’s chart.
You’ll find the trading interface after scrolling down. Trade execution on Shrimpy works with the help of smart order routing. Smart Order Routing is a system designed by Shrimpy that evaluates all pairings offered on an exchange in order to optimize the outcome of a trade. More information about our Smart Order Routing system can be found here.
Smart order routing allows you to trade using CEX liquidity but with the simplicity of a DEXs token swap interface. Once you get to confirm the transaction you’ll get to see where the liquidity for your trade came from.
If you want to learn more about crypto trading, I recommend reading the following articles:
Marko is a crypto enthusiast who has been involved in the blockchain industry since 2018. When not charting, tweeting on CT, or researching Solana NFTs, he likes to read about psychology, InfoSec, and geopolitics.