Spot & Futures 101 · Chapter 6
Long vs short & order types
There are only two directions. Going long means you profit as price rises: you buy first and sell later. Going short means you profit as price falls: you sell first and buy back later. On a perpetual both are a single click, because you are trading a contract rather than borrowing coins from anybody.
The payoffs are not quite mirror images, though. A long can lose at most 100% — price cannot go below zero — while the upside is open-ended. A short's profit is capped at 100% (price reaching zero) while its loss has no ceiling: a coin that triples costs a short twice their notional. With leverage on top, neither side gets anywhere near those extremes before liquidation arrives.
Shorts also pay the crowd tax: when funding is negative, shorts pay longs every interval. Being right about direction and wrong about timing is expensive on both sides of the book.
Market and limit — how you get filled
A market order crosses the spread and fills immediately at whatever prices are resting in the book. You are guaranteed execution, not price: in a thin or fast market a large order walks several levels and the average fill can be well away from the quote you saw. You always pay the taker fee.
A limit order sets the worst price you will accept and waits in the book until someone trades against it. You are guaranteed price, not execution — the market may simply never come back. In exchange you add liquidity and usually pay the lower maker fee.
The choice is genuinely situational: market when being in the trade matters more than a few basis points, limit when the level is the reason for the trade.
Stop-loss, take-profit and stop-limit
A stop-loss is a dormant order that activates when price reaches a trigger, then closes the position to cap the damage. It is the difference between a planned loss and a liquidation, and on a leveraged position it should exist before the trade does.
A take-profit is the same machinery pointed the other way: an order that closes into strength at a level you decided while calm.
Both come in two forms. Stop-market fires a market order on trigger — it gets you out, possibly with slippage. Stop-limit fires a limit order — it protects your price, but in a fast move price can gap straight through your limit and leave you in the position you were trying to exit. For risk exits, stop-market is usually the honest choice.
A trailing stop follows price by a fixed distance or percentage, ratcheting in your favour and never backwards — a way to let a winner run without watching it.
The flags worth knowing
Post-only cancels the order rather than letting it execute as a taker — it guarantees maker fees and is the standard tool for passive entries. Reduce-only guarantees the order can only shrink an existing position, never flip it; it is what stops a mistyped exit from opening a fresh short. Time in force decides how long the order lives: GTC rests until cancelled, IOC fills what it can right now and cancels the rest, FOK demands the entire size at once or nothing.
Together with the margin and liquidation mechanics from the earlier chapters, these are the whole toolkit: a direction, a way in, a way out if you are right, and a way out if you are wrong. The last one is the one that decides how long you get to keep playing.