RemiAO π 🚀$WKC is the BullRun🐂

Two Ways to Trade on Pi DEX--- Swap vs Limit Order Pi DEX offers 2 important ways to trade tokens. The first is Swap. Swap allows users to exchange tokens through a liquidity pool using a mathematical algorithm. I already explained how this works in my previous post. The second is Limit Order. A limit order allows users to set their own buying or selling price and amount through an order book. This is a trading method we are already familiar with from CEX. So, when should we use each method? For example, if you are playing a game and need to exchange tokens quickly, or if you only need a small amount of tokens, Swap can be a good choice. But what if you want to buy thousands of tokens instead of just a few? That's when things become different. If the DEX liquidity pool does not have enough Pi and the token you want to buy, making a large swap could cause a big price change. This happens because your own trade changes the ratio of tokens in the liquidity pool. This is called Price Impact. There is another situation. Even if you can swap immediately, you might feel that the current price is too expensive. Maybe you want to buy the tokens at a slightly lower price. And there is one more risk. Imagine that you are making a swap, but during those few seconds, someone else makes a large trade in the same liquidity pool. The token ratio in the pool could change, and you might receive fewer tokens than you originally expected. This difference between the expected result and the actual result is called Slippage. That is why Swap has a safety setting called Slippage Tolerance. Look at the first image. I marked the ±1.00% setting in red. For example, let's say you expect to receive 100 tokens from a swap. If you set your slippage tolerance to 1%, the usual minimum-received setting means you will not accept a trade that gives you fewer than 99 tokens. If the price changes too much and the result goes beyond your allowed limit, the swap will not be completed. However, remember one important thing. Slippage tolerance does not protect you from the price impact caused by your own trade. So, what should you do if you want to trade a large amount of tokens or buy them at your preferred price? This is where Limit Orders become useful. Let's look at the order book in the second image. Usually, buyers want to buy tokens as cheaply as possible, while sellers want to sell them at the highest possible price. Buyers place orders with their preferred prices and amounts. Sellers do the same. When their prices match, the trade can be completed immediately. But what if nobody wants to trade at your chosen price? Then you may have to wait a long time. Sometimes, your order may never be filled. Still, the biggest advantage of a limit order is simple. You can decide the price you are willing to pay or accept. This can be especially useful when you want to buy a large amount of tokens. If you are worried about a big price impact caused by low liquidity, placing a limit order may be a better choice than making a large swap immediately. Of course, limit orders also have limitations. If there are not enough sell orders in the order book, your buy order may only be partially filled, or you may have to wait. So, both trading methods have their own advantages and disadvantages. Swap is useful when you want to exchange tokens quickly and easily. Limit Order is useful when you want more control over the price and are willing to wait for a better deal. That is why Pioneers should not always use Swap without thinking. Before trading on Pi DEX, we should consider the amount of tokens, available liquidity, price impact, and the buy and sell orders in the order book. The larger your trade, the more important it becomes to compare these two methods. #pi #파이 #파이덱스 #pidex