To understand how Target price conversions work, here's what you need to know:
- When it will be triggered
- Partially executed Target price conversions
- Reserved balance
- Time the order will be alive
- Assets available
- Limitations to defining a target price
When it will be triggered
A Target price conversion will be automatically executed once the market price of the asset you are buying or selling matches the target price you defined in your programmed conversion.
Also, there must be sufficient liquidity in the market to fully execute the conversion at the price you set. This means there must be a counterparty willing to buy/sell at least the full amount you programmed in your conversion, or else it will be partially executed.
Partially executed Target price conversions
It’s possible that when the target price is met in the market there isn’t someone willing to buy/sell your entire programmed amount to fully execute a conversion. In cases like this, Bitso will automatically buy/sell the maximum amount possible according to available liquidity.
These are what we call partially executed orders, which occur in specific conditions where there isn’t enough demand to buy or sell an asset at the programmed target price. But don’t worry, this doesn’t mean the remaining amount won’t be sold or bought; you will only have to wait for the market to build up enough liquidity at the defined price for the rest of the conversion to be triggered. This is why sometimes a programmed target price conversion can be executed through multiple transactions. If you wish, you may also cancel the remainder of the programmed target price conversion that was partially executed.
Any amount used to program a Target price conversion will be reserved from your total balance in order to be able to conduct the conversion at the time it triggers. Consequently, as long as the programmed target price conversion is set, you won’t be able to use the reserved amount for any other purpose other than the desired transaction. This amount won’t be available to convert, trade, or withdraw from Bitso until the programmed conversion is executed or cancelled by you.
Time the order will be open
The order will be open until the target price is reached and the programmed conversion is automatically executed, or until you manually cancel the order in the Activity tab. There is currently no expiration period for any programmed target price conversion. Therefore, we recommend you review your active programmed orders in the Activity tab to avoid having a reserved balance in a currency you wish to make use of.
Assets available to program a Target price conversion
Unlike regular conversions, Target price conversions aren't available for every possible pair of currencies. The reason behind this is that in order to trigger the conversion at the exact target price you defined, we need to ensure that the liquidity and price fluctuations for the two selected assets are stable and instantly available when market conditions are met. Target price conversions are then limited to currency pairs for which we have an available and fully operational trading book in our systems. You can check which pairs are available here.
Limitations to defining a target price
Given the nature of this type of operation, the only way we can guarantee your Target price conversion is executed at the exact price defined is by programming to buy at a lower price or to sell at a higher price. This is due to the logic used to automate these transactions, which take place by setting price limits, or thresholds, in which you are allowing the system to execute a transaction.
When programming to “buy” an asset, you are really telling our system that you agree to buy an asset where the target price represents a “maximum” price you’re willing to pay. If the system finds any cheaper price available, it will buy it at that price instead, since it’s within your defined limit.
Therefore, if you program to buy an asset when the price goes up, the conversion will automatically buy the asset at the current market price, since it’s lower than your target price, meaning the price is within your established “maximum” limit.
Conversely, when programming to “sell” an asset, you are setting a “minimum” limit at which you are willing to sell. In this case, if the system finds any price that is higher than your target price, it will automatically execute to sell at that price, because it's above your minimum price limit to sell at a better price.
So, if you program to sell at a lower price, the conversion will be automatically triggered at the current market price since it’s a better price to sell within your limits.
It's important to note that this feature doesn’t cover more advanced trading strategies that involve stop-loss and stop-limit orders. If you want to take your strategy one step further, you can always access more complex functionalities through Bitso Alpha.
You will see the fees for these transactions (spread) in the Confirmation Screen and Success Screen during the Target price conversion Flow.