This article will describe in details what the shadow order is and how it can be used for strategic trading via Bitsgap. We highly recommend getting familiar with essential functions of this type of order because it is critically important to execute it in a right way.
What is a shadow order?
The main feature of the shadow order is a hidden placement. This means that the order won't be displayed in the order book and your funds on the exchange won't be frozen which creates a window for more opportunities to use your funds. You will be able to assign multiple order using the same base currency and the first pair that meets chosen price will be executed for full amount specified in trade.
For instance, you would like to purchase any of these currencies: ETH, XRP or LTC (you can purchase any other currency, this is just an example) at the best price possible. You are not entirely sure which one will reach the desired price, and you don't want to miss an opportunity by freezing your BTC holdings for any one trade. With shadow order, you can use the full amount of your BTC holdings and place three equal orders at the same time. As soon as any chosen currency pair is in a price range in your pre-settings, we will send a request to fill an order for you.
There are many ways to use shadow order for your daily trading; we would like to cover two basic options available for you and explain when you can use them.
Shadow Buy Order
You can use the shadow buy order when you want to purchase any of the chosen asset lower than the current market price. It is very important to assign a lower price in buy order. Otherwise, this trade will be filled immediately because price already enters in range current price < assigned.
When: We have 5 900 USDT available for trading, and we would like to purchase any asset that reaches the best or lowest price for us. Let's assume we will create three orders by using all of our funds available:
1). We place an order for BTC of a total amount of 5 900 USDT to be used
2). Then we place another order for ETH of a total amount of 5 900 USDT to be used
3). Finally, we will place the last order for XRP of a total amount of 5 900 USDT to be used. The first asset that meets the chosen price will be executed fully and our system will cancel any other shadow order associated with the assigned amount.
Shadow Sell Order
You can use the shadow sell order when you want to sell asset into any currencies with the best possible rate and higher than the current market price. This time it is necessary to assign a higher price in the sell order. Otherwise, this trade will be filled immediately because price already enters in range current price > assigned. The shadow sell order is less useful compared to its buy version, but still, you can use a combination of both buy and sell to maximize the income from your portfolio.
When: We have 1 BTC available for trading, and we would like to either sell it for fiat or use for trading altcoins. We are not sure if it is a good idea to sell your bitcoin or use it to buy your favorite altcoin. To maximize the income from your trading and don't miss an opportunity to purchase any other altcoin at a better rate we can place two shadow orders to use your BTC holdings at full:
1). We place a shadow sell order for USDT to sell our bitcoin for 6 800 USDT
2). We place a shadow buy order for ETH of a total amount of 1 BTC to be used. The first currency pair that meets the selected price range will be executed fully, and our system will automatically cancel any other shadow order associated with the assigned amount.