What's a limit order?

What is a limit order?

A limit order allows you to buy or sell cryptocurrency at a limit price you determine or a better price depending on market conditions.

The main advantage is limit order ensures that you won't be matched with a less favorable price than your agreed-upon price. This control lets you wait for the market to reach a specific price target instead of accepting the current market price.

While limit orders offer strategic advantages, it's essential to note that the drawback of limit orders is that your order may be executed partially, or not filled at all.

How do limit orders work?

To place a limit order, you specify a price at which you are willing to execute the trade. Once set, your order is placed in the order book, waiting for the market price to reach your specified limit price. This contrasts with market orders, which execute instantly at the prevailing market price.

Once the market price reaches your limit price, your order will be filled at your limit price or better.

Due to the liquidity contribution made by limit orders to the order book, reduced maker fees are applied.

How to set a limit price?

A buy limit order is only filled at the limit price or lower, and a sell limit order is only filled at the limit price or higher.

For instance, if the current market price of BTC/USDT is 50,000, your limit price for a buy order should be lower than 50,000. Similarly, if you want to place a sell limit order, your limit price should be higher than 50,000.

If your limit price falls on the wrong side of the order book, your order will be executed immediately as a market order incurring higher taker fees.