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The price difference between selling and buying is too high

Will
  • Updated
I'm trying to buy a token and I get the message "The price difference between selling and buying is too high", what does it mean?

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Relevant terminology
 
The DEX
 
XRP Ledger has a native decentralized exchange (DEX) that lets anyone buy or sell any asset that exists on the XRPL. Since anyone can issue assets on the XRPL, the DEX is an incredibly useful and powerful tool. It is basically a global market place where buying and selling takes place at any time. 
 
The Spread
 
The spread is the difference between the bid and the ask prices of a token on the DEX. For example, if you place an order for 100 tokens for 100 XRP, but the current orders are for 100 tokens for 105 XRP, the spread is 5 XRP. You are bidding 100 XRP, people are asking for 105 XRP. The difference is 5 XRP. 
 
Market Order
 
A market order is a transaction that tries to buy or sell tokens at the best available price on the DEX. If you are going to place a market order, you should review the charts and the order book depth before placing an order. Make sure that there is a market on both sides of the order book. This means lots of sellers and lots of buyers. If there is only a large number of sell orders, it means that you are trading in an illiquid asset. 
 
How the Xumm "Exchange" option works
 
The "Exchange" feature in Xumm basically places a market order on the DEX. It tries to buy/sell your tokens immediately based on the current liquidity. We built safety features into Xumm that prevents unexpected results when placing an order. If the Spread is more than 4%, you will receive the message:
 
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This is where Xumm protects you: we will not allow you to make an instant market swap/trade on a pair that is so illiquid that you will get a lot less of the exchanged asset in return than the current spot price warrants. It would basically mean that, if you make the trade and then decide to trade back to your original asset, you'd lose a significant percentage of your funds.
 

How do I exchange my tokens then?

Only proceed if you understand and accept that by trading the selected asset you're at risk of getting bad exchange rates. When trading in assets that have low liquidity, one of your best options is to create a limit order and specify the exact price you would like your order to be executed at. This allows the DEX to match your order at your desired price when it becomes available. Xumm comes with an xApp that will allow you to create a limit order called the "DEX Trade xApp". You can find it in Xumm by pressing the "x√" button at the bottom of the screen, then selecting "View more xApps". 

 

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What are these "3rd party Xumm enabled applications"?

There are several other ways to place orders on the DEX. Here are a couple of options:

Additional reading

Notes

We understand that you might have additional questions regarding this topic so you are welcome to contact us any time via the Xumm Support xApp in Xumm or you can simply scan this QR code with Xumm and be directed there automatically.

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