📚Additional Knowledge

DEXs and CEXs Difference

‌DEX is decentralized exchanges, CEX is centralized exchanges.‌

In DEX, you are trading directly with your wallet, and you are free from regulations or centralized monitoring. There is no third party involved in the exchange. Each user has full access to their private keys and their crypto assets. However, DEX usually has a limited number of features that are not competitive against CEX in terms of experience.‌

In CEX, you must do KYC and abide by your countries' regulation to use the platform. The upside is, CEX has many features like margin trading, grid trading, and much more in comparison to DEX.‌

Price Slippage

‌Slippage occurs whenever you use a market order to execute your trade. (Slippage does not happen in a Limit Order.) For example, if you are looking to trade $600 for BNB (Which is currently $300), you would expect to get 2 BNB since $600 = 2 BNB.‌

However, a market order will buy the closest Sell Order; Depending on the Sell Order, you would end up buying $150 of BNB at $300, $100 at $305 per BNB, another $100 at $310 per BNB, then the remaining $250 for $315 per BNB.‌

In return, you'd receive less than 2 BNB with $600.‌

Why use Limit Order?

‌Limit orders may take longer to fill. (Sometimes, not even filled if the price moves too quickly in one direction.)‌

The risk in market orders is unpredictable slippages resulting in a high paper loss instantly after executing it. The risk of limit orders is FOMO; you might miss out on the opportunity to buy certain assets as early as possible if you believe the asset price will take off.‌

Limit Orders helps you to get the most out of your trade. And, slippage does not occur in Limit Order.