How Our User Bought Only 102,698 UMI For 12 BTC
ROY Club is a large international community with over 350,000 users all over the world. Every day our users run successful deals with UMI cryptocurrency worth of over $ 2,000,000 (https://umi.top/ru/volumes). However, some deals may turn out to be shocking due to users’ thoughtlessness. 👇
📌 Some time ago, a user from Africa bought UMI for 12 BTC.
📌 However, he only received 102,698 coins instead of 350,000 UMI based on the then-current price.
📌 In other words, the user paid 3 or 4 times more.
How has it come to this? In a nutshell, no one duped this user, and there were no technical errors. It’s actually quite simple: through their lack of knowledge or thought, the user created a market order instead of a limit order for the entire amount.
Those who’ve been trading on the exchange for a while have already figured out what the problem is. The user hit the order book with a market order worth of 12 BTC and bought all available sell offers out there, at all available prices. The last transaction bought him only 0.78 UMI for 1 BTC.
Now, we’ll try to explain to all our users why it happened and what you need to do to prevent this from happening to you.
How do orders work on the exchange and why it happened?
There are two types of orders on the SIGEN.pro cryptocurrency exchange:
✅ Market order is a cryptocurrency buy or sell offer that buys or sells at the currently available prices (set by other traders).
✅ Limit order is a cryptocurrency buy or sell offer that is executed at a fixed price.
Let’s see how it works in practice.
Some traders create limit orders with a certain price. If we open the order book on the SIGEN.pro exchange, we’ll see a whole range of limit orders:
The order book on the left displays limit buy orders, the order book on the right — sell orders. As you can see, traders want to sell their coins for $ 1.87, $ 1.88, $ 1.89, etc. IMPORTANT! Sell offers with the $1.87 price are only worth of 19,524 UMI.
So limit orders are really simple: the trader indicates the amount in cryptocurrency and a specific fixed price to buy/sell cryptocurrency. If the market has no offers with this price, they’ll have to wait until other users respond to the created order.
Market orders are different: they are used to buy or sell cryptocurrency immediately, and you don’t have to wait at all. BUT! Coins are automatically bought or sold at the currently available prices, i. e. the prices in the currently available limit orders. Here’s a graphic example. If in this context the trader wants to buy UMI worth of $ 200,000 and creates a MARKET rather than LIMIT order, the following will happen:
1. They’ll buy 19,524 UMI for $ 1.87 per coin (worth of $ 36,598).
2. Then, another order will be executed for 1 UMI for $ 1.87.
3. Then, another order will be executed for 10,598 UMI for $ 1.88 per coin (worth of $ 19,926).
4. Order for 20 UMI for $ 1.88 per coin (another $ 37).
5. Then for $ 1.89 per coin (another $ 14,162).
6. And so on until the limit of $ 200,000 is reached.
What if you buy MORE UMI using a MARKET order? The average UMI buy price will be a lot higher as the sell order book simply doesn’t have the adequate amount of cryptocurrency at the current market price.
In other words, a market order will buy all offers on the market until it buys the amount of coins worth of the indicated amount. It does so with no regard to the price.
This is why our user only bought 102,698 UMI for 12 BTC. This user created a market order and bought UMI at all available prices — at higher and higher and higher prices until the entire 12 BTC amount was spent. As a result, the average UMI buy price turned out to be a lot higher than the market price. In the end, the user caused UMI price to exceed BTC price by buying just 0.78 UMI for 1 BTC in the last transaction!
This is how limit and market orders work. Let’s revise this:
👉 Use limit orders if you want to buy/sell cryptocurrency at a desired price and are ready to wait.
👉 Use market orders if you want to buy/sell cryptocurrency immediately using the price and amount of coins in the order book.
What is the RIGHT way to buy/sell coins worth of large amounts of money?
If you want to buy or sell cryptocurrency worth of large amounts of money, it’s recommended that you use limit orders. In this case you can set a fixed price and wait until your offer is executed.
Let’s look into the procedure using a buy transaction as an example (sell transactions are similar). Is it hard to understand order mechanics without getting confused? No.
‼️ SIGEN.pro exchange allows you to view the amount in cryptocurrency to be bought with this or that order. Here, we’re selecting a market order and enter 12 BTC. At the bottom, we’ll see the amount in UMI to be bought for 12 BTC:
You can immediately see that it’s a lot less than the average market price you could buy. The exchange automatically counts all UMI coins currently available in the sell order book at the available prices and displays the result.
It means the user could see how many UMI coins they would get for 12 BTC.
If, however, we select a limit order and an average market price, the number of coins would be completely different — three times as many or more:
So the screenshots show us that:
✅ A market order worth of 12 BTC would buy us less than 100,000 UMI;
✅ A limit order would buy over 360,000 UMI.
It’s obvious that limit orders are a lot more profitable than market orders for big transactions.
It should be noted, however, that a limit order for a large amount of money wouldn’t be executed immediately. Your offer would be added to the order book and you would have to wait until a sufficient number of users wants to sell you the right number of coins at the specified price.
We’d also like to note that if a sell order book has a certain number of coins at the right price and you create a limit order, a part of cryptocurrency will be bought immediately while the remaining part will be sent to the buy order book.
Let’s look at an example. The sell order book has 20,000 UMI at the price of $ 1.87. Let’s assume you want to buy 50,000 UMI at the price of $ 1.87. After you create a limit order for this amount at this price, the following will happen:
✅ 20,000 UMI will be immediately bought at the price of $ 1.87;
✅ A limit order will be created for the remaining amount at the price of $ 1.87; this order will be added to the buy order book;
✅ Then you need to wait until other users sell the remaining 30,000 UMI to you at the selected price.
We’d like to emphasize that the created limit order can be cancelled or edited at any time.
Conclusions
Let’s revise order execution mechanics at the SIGEN.pro exchange for the last time:
📌 A market order buys/sells coins immediately at the currently available prices. The final price may deviate from the average market price if the amount in the order is too big.
📌 A limit order buys/sells cryptocurrency at a specific fixed price. However, you might have to wait until your order is executed to the full.
Use common sense when you create orders. Remember: your coins are your responsibility!
What can the ROY Club user who paid too much for UMI do? Nothing. Unfortunately, this user made a mistake by creating a market order for the entire amount instead of a limit order. It’s important that you understand that neither the ROY Club nor SIGEN.pro were the ones who received these bitcoins. All 12 bitcoins were received by the exchange users who had created limit sell orders with high prices. It should be noted that these orders were created by users with no violations of exchange rules.
Neither the ROY Club nor the SIGEN.pro exchange are to blame for the situation — this is how trading works. Neither the ROY Club nor SIGEN.pro can take bitcoins back from the users who sold UMI at a high price as these transactions were executed with no violations of exchange rule or technical errors.
Lastly, we’d like to note that this could happen anywhere: not only at SIGEN.pro or with UMI cryptocurrency. It’s not the fault of the trading platform — it’s the standard order mechanics used on the world’s exchange platforms.
As an example, let’s look at the recent drop in ETH price to $ 700 at the Kraken exchange. It happened while the price at other exchange platforms was $ 1,500.
As representatives at Kraken explained, the anomalous drop in price was caused by trader actions. Due to big transactions featuring market orders, there were not enough buy offers at the average market price.
A similar situation happened at SIGEN.pro when UMI price rose to an anomalously high value due to a big market order. Therefore, be very attentive at all times and use orders correctly — and it’s going to be fine!
Yours, ROY Club! Follow us!