Limit Orders
Welcome to the guide on setting up Limit Orders on FireFly DEX! Limit Orders allow you to execute trades at specific prices, offering a unique blend of liquidity provisioning and targeted trading. Let's dive into how you can use this feature to enhance your trading strategy.
Understanding Limit Orders on FireFly
Limit Orders in FireFly are a bit different from traditional markets. Here, you can approximate a limit order by providing liquidity with a single asset within a specified price range. This method combines the precision of limit orders with the benefits of being a liquidity provider.
How to do Limit Orders - Following these steps should help you provide single-sided liquidity for ETH/USDC on Firefly and buy ETH when it drops to $3000 (This is an example, you can set the price when you want to buy. Current Price: 3149.37 USDC per ETH)
Create New Position: If you don't already have a position in the ETH/USDC pool, click on "Create New Position." If you already have a position, skip to step 3.
Add Liquidity: If you already have a position, click on "Add Liquidity" instead.
Supply USDC: In the provided box, enter the amount of USDC you want to supply. For example, let's say you want to supply $10 in USDC.
Set Price Range: Set the minimum and maximum price range for ETH. Since you want to buy when ETH drops to $3000, set the minimum price slightly below and the maximum price slightly above $3000.
Preview and Supply: Click on "Preview" to review your transaction details. Ensure that everything looks correct. Then, click on "Supply" to proceed.
Wait for Order to be Filled: Once your order is filled, you will have bought ETH at the specified price of $3000.
Types of Limit Orders
Executable Limit Orders
Take-Profit Orders: For instance, if the USDC/ETH price is 2,300 USDC/ETH and you wish to sell ETH when it reaches 2,400 USDC/ETH, set your range with ETH as the asset at this target price.
Buy Limit Orders: If you expect ETH to drop to 2,000 USDC/ETH, place a range order to buy ETH using USDC at this price point.
Non-Executable Limit Orders
Buy Stop and Stop-Loss Orders: Due to the nature of asset allocation in the range order system, some traditional limit order types like Buy Stop and Stop-Loss are not executable.
Earning Fees as a Liquidity Provider
One of the perks of using Limit Orders on FireFly is the potential to earn fees. As your order is also a form of liquidity provision, you accrue fees in both assets of the pair being traded.
Key Considerations
Order Fulfillment: Keep in mind that if the spot price exits your range and then reverses direction before you withdraw the target asset, the order remains unfilled. Active management or the use of third-party position management services may be necessary.
Range Selection: Choose your price range wisely. A wider range might earn more fees but also increases the risk of the order remaining unfilled if market prices fluctuate significantly.
Conclusion
Limit Orders on FireFly offer a unique and versatile approach to trading. By understanding and utilizing this feature, you can strategically position your trades while enjoying the benefits of liquidity provision.
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