Trying to understand a few things so we will pretend a scenario below.
In my crypto wallet I own total of 5 BTC.
The current market price per 1 BTC is $100
If I enter a trade and buy 1 BTC asset @ $100 and set my TP @ $120.
When the market price reaches the TP what actually happens? I know I am exited from the trade but does this 1 BTC asset that I just bought get sold or something? Does the executed TP sell my asset and does this mean that the 1 BTC asset gets put into my crypto wallet making me have a total of 6 BTC now? Or do I have $120 USD FIAT now and 5 BTC still?
I’m confused can anyone help me understand in laymen terms please.
If your trading you assets. You basically buying low and selling high. So to increase the volume of BTC you would need to go through a faze of buying low and selling high while the market is fluctuating to gain the additional money to buy the extra 1x BTC.
So if you buy at $100 and sell at $120, you’ve made $20 profit. Now set another order to buy at $100 and sell that at $120. Now you’re $40 in profit, now do this 3 more times and you’ve hit $100 profit. So you can now buy that extra 1 BTC at $100. That obviously assuming that prices are fluctuating to allow this to happen.
Hitting the TP means your 1 BTC asset is sold at the set price of $120, converting it into $120 in fiat currency. So, you still have 5 BTC, but you also now have $120 in your wallet.
Well if it’s a TP it’s a futures market if I understand correctly. When you buy a futures contract worth of 5 bitcoins you don’t actually buy Bitcoins, you buy the contracts. So when the TP is hit the market automatically places a market sell order (because you bought before) and sells the contracts at the price you chose as a TP.