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Limit Orders for Beginners - What Are They, and How Are They Used in Bogged Finance?
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Limit Orders for Beginners - What Are They, and How Are They Used in Bogged Finance?

Limit Orders are, in essence, instructions to BUY or SELL an asset at a specific price, within a specific timeframe

October 8, 2021

In this article, we will discuss the principle of Limit Orders, and how to use them within the Bogged Finance system.

Content Summary

  • What is a Limit Order
  • How to Open the Limit Order system
  • Connecting your Wallet
  • Creating a Limit Buy
  • Creating a Limit Sell
  • Slippage & Trade Summary
  • Key Information


What is a Limit Order?

Limit Orders are, in essence, instructions to BUY or SELL an asset at a specific price, within a specific timeframe. Originally, Limit Orders would be placed by a client via an asset broker, who for a fee, would then complete the instruction of the client once the asset has reached the desired price.


Since the introduction of order books, electronic ledgers and Automated Market Makers (AMM’s), Limit Orders moved away from traditional asset brokers and in turn to complex algorithms, and can now be found frequently within the investment space. These algorithms will review the asset price continually and, should the price of the asset hit the desired sell or buy point, the purchase or sale will be made in line with this. 


An example of this is below:

Asset X is currently trading at $41.00 per unit.

You wish to buy asset X with $1,000, but believe the price to drop in the next few days.

You create a Limit Buy of the asset at $38.00 per unit for your $1,000.

If the asset price falls to $38.00 or below, your Limit Buy will be activated, and you will then hold just over 26 units of the asset purchased for $1,000.

If the asset price does not fall to your limit purchase price, the order is not processed. Limit Orders are generally subject to being in operation for a set period of time, and with Bogged this is 31 days, so the order will remain open until such time as it expires. 

How to Use the Bogged Finance Limit Order?

Bogged has spent significant time and effort to create a seamless product that allows you to create Limit Orders with ease, from your mobile to your desktop. For the low cost of just $2.50 worth of Bogged tokens, a Limit Order can be placed which will be active for 31 days.

If the order is not processed within this timeframe, the Limit will expire.

To use the Bogged Limit Order system, you will need the following:

  • $2.50 worth of Bogged tokens
  • BNB to cover the transaction costs
  • BNB or BUSD sufficient to cover the buy order (if using Limit Buy).
  • If using a Limit Buy, the amount of BNB or BUSD you have selected to purchase the token MUST remain on your wallet. If this is used for another purpose whilst the limit is open, your order will be cancelled due to insufficient funds.


In the steps below we will outline how to create a Bogged ‘Limit Buy’ order, followed by a ‘Limit Sell’.


Step 1 - Open the Bogged.Finance Limit Order system

Using the app.bogged.finance/trade link, press ‘Trade’ followed by ‘Limit Order’ as per the below screenshot.




Step 2 - Connect your Wallet and Select the Blockchain

At the top right of the page, you will notice the wallet icon, and to the left of this, the blockchain you will be operating on. To connect your wallet, simply press the Wallet icon and accept.




Step 3a - Select your Limit Order and Token (Limit Buy)

For the purpose of this section, we will operate using a ‘Limit Buy’, however, the principle remains the same for a ‘Limit Sell’ which is covered in detail in the ‘Limit Sell' section below.

Assuming you have pressed ‘Limit Buy’, you will now be required to select the Token you wish to buy in the large green ‘Select a Token to Buy’’ section. 



Bogged provides a sizeable number of tokens already within this list. If the token you wish to create the Limit Order for is not located in this, you will need to find the Contract Address of the token and paste it within this section - the system will then locate the token for you to select, as per the below:



Step 3b  - Select your Limit Order and Token (Limit Sell)

Following in a similar theme from the ‘Limit Buy’ section above, the ‘Limit Sell’ offers much the same features and layout, as can be seen from the below screenshot:




To initiate a Limit Sell, you will first need to select which Token you hold that you wish to sell, by pressing the large red ‘Select a Token to Sell’ section, as seen in the screenshot above.

Bogged provides a sizeable number of tokens already within this list. If the token you wish to create the Limit Order for is not located in this, you will need to find the Contract Address of the token and paste it within this section - the system will then locate the token for you to select, as per the below:






Step 4a - Selecting Target Price for Limit Buy

As you have now selected your token, you can proceed to select whether you wish to purchase this in BUSD, or BNB. Select whichever you hold a balance for, and include the amount which you wish to buy.

In this instance below, we are using 2 BNB to buy a set number of BOG:


On entering the BNB or BUSD purchase value, the ‘target amount’ section will automatically populate with the current number of tokens that BNB would provide at the present market rate. As such, you will need to manually change this - if you do not, the limit will proceed at the current rate. 


In this section, you also have three options to change your targeted amount. 

Pressing the green circular arrows to the left of ‘Target Amount’ will allow you to choose 3 different options as follows:


  • Target amount - to buy an absolute number of selected tokens
  • Target Price in BNB (or BUSD*) per token - if BNB is priced at $428, and BOG at $0.86, this would show as 0.00199 - as you will pay 0.00199 BNB for each BOG token
  • Target Price in tokens per BNB (or BUSD*) - this will show you how many tokens you will receive per BNB


*If you selected BUSD in the ‘Amount’ section, it will show you the above in BUSD as opposed to BNB.


For new users of Limit Buy orders, the ‘Price in Token per BNB / BUSD’ option may be the easiest to start with, as this gives you simple control of exactly how many tokens you wish to receive for a single BNB or BUSD. 



Step 4b - Selecting Target Sale Value for Limit Sell

As you have now selected your token, you can proceed to select whether you wish to sell this in BUSD, or BNB. Select whichever you wish to receive the sale proceeds in, and include the amount which you wish to sell.


In this instance below, we are selling 1 BNB to BUSD:



On entering the amount of BNB you wish to sell, the ‘target amount’ section will automatically populate with the current number of tokens that the number of BNB input would provide at the present market rate. As such, you will need to manually change this - if you do not, the limit will proceed at the current rate. 


In this section, you also have three options to change your targeted amount. 

Pressing the green circular arrows to the left of ‘Target Amount’ will allow you to choose 4 different options as follows:


  • Target Amount - to sell for an absolute number of either BNB, or BUSD tokens
  • Target Percent Change - in which your selected token will sell at a selected percent increase
  • Price in BUSD per Sale Token - this will allow you to select how many BUSD tokens you will receive per token you wish to sell
  • Price in Sale Token per BUSD - if BNB is priced at $434, and BUSD at $1.00, this would show as 0.0023 - as you will receive 0.0023 BNB for each BUSD token


The option of ‘Target Percent Change’ would be recommended for new users of the Limit Sell function.

 



Step 5 - Slippage & Trade Summary

The Slippage section will need to be completed with care. If you are trading a token with a transaction tax (i.e. a tax on either a sale or purchase), the amount of tax in percentage format will need to be included in the slippage section. 


If there is also a large amount of price action on the token, additional slippage may be required to cover for this. Slippage is the variation between the market value and what you are willing to receive. An example of this would be:


  • Token is trading at $100.00 and has a transaction tax of 10%
  • Price movement is high given the trading volume


To buy this token, you would look to include a slippage of 10%, which would give you $90.00 for every $100.00 invested. Conversely, selling this token at $100.00 would provide you $90.00. However, due to the high price action on this token, you may need to include additional slippage to cover the rapid movement of the asset price, as such 11% slippage could be used, further reducing the amount you receive, but ensuring your order is placed.


In the case of the Limit Buy, a slippage of 4% will be used to cater for the BOG transaction tax, and potential price action. We will then see the below Trade Summary for the Limit Buy:


The Limit Sell shows us a similar breakdown, as per the below:


All of the key information is provided here, and this will need to be reviewed in detail as once the order has been placed, you are unable to change this and will be required to cancel the order and in turn, place a new one.

If you are happy with your order, press the ‘Place Order’ button. You will be required to accept the transaction and the associated gas costs. Once done, congratulations, your order is now placed and will now be visible in the ‘Your Orders’ section of the Limit Orders page.


You may also notice another section below named ‘Orderbook’. Within here, you can see all Limit orders placed on your selected token by other Bogged users. This can give you valuable insight into what other Bogged users are doing, and help you to understand how other traders operate.





Key Information

It is important to always bear in mind the below:

  • You are always responsible for your own orders, ensure you complete these with care and diligence.
  • An amount of BOG equivalent to $2.50 is required to place a limit order.
  • Sufficient BNB is required for all transactions to cover the associated gas costs.
  • Enough BNB or BUSD is required to cover the purchase amount (if using Limit Buy) - should this amount be used for another purpose whilst the limit order is open, it will automatically cancel.
  • If adding a new token, ensure the Contract Address is correct. BOG accepts no liability for tokens invested which are not legitimate, you are always required to do your own research before investing into any project.


Bogged Finance does not provide any advice, although our products are created to assist you in trading, we are not responsible for any losses incurred via the use of our suites.