CCE Crypto Trading and Exchanges 2

Question 1

What is a 'maker' in the context of cryptocurrency exchange order books?

Accepted Answer

A trader who adds liquidity by placing limit orders that rest on the book

Answer

A maker adds liquidity to the order book by placing limit orders that are not immediately filled, earning lower fees on most exchanges.

Question 2

Which order type guarantees execution but not price in cryptocurrency trading?

Accepted Answer

Market order

Answer

A market order executes immediately at the best available price, guaranteeing execution but not the exact price received.

Question 3

What does 'slippage' mean in crypto trading?

Accepted Answer

The difference between the expected price and the actual execution price

Answer

Slippage is the difference between the expected trade price and the actual price at which the order is filled, often due to low liquidity or volatile markets.

Question 4

On a centralized exchange (CEX), who holds custody of user funds?

Accepted Answer

The exchange itself

Answer

On a CEX, the exchange holds custody of user funds, meaning users must trust the exchange with their private keys and assets.

Question 5

What is the purpose of a 'stop-loss' order?

Accepted Answer

To automatically sell an asset if its price falls to a specified level

Answer

A stop-loss order automatically triggers a sell when the asset price drops to a set threshold, limiting potential losses.

(CCE) Certified Cryptocurrency Expert Practice Test

(CCE) Certified Cryptocurrency Expert Practice Test

CCE Crypto Trading and Exchanges 2