Limit Order

A Limit Order is an order to buy or sell cryptocurrency at a pre-determined price or better. Unlike a market order, a limit order does not execute immediately but waits until the asset’s price reaches the specified level.

Key features of a limit order:

1. Control over price: You set the exact price at which you want to buy or sell the asset. The order will only execute when that price is reached or better.
2. No guarantee of execution: If the market price does not reach the specified price, the limit order may remain unfilled. This differs from a market order, which always executes immediately.
3. Usage: Limit orders are typically used by traders who are not in a hurry to execute a trade and wish to obtain a better price.

Example:

• The current price of Bitcoin is $30,000.
• The trader wants to buy 1 BTC at $28,000 and places a limit order.
• The order will only execute if the price of Bitcoin falls to $28,000 or lower.

Advantages:

• Control over the trade: Allows the trader to avoid unfavorable prices when buying or selling.
• Better conditions: Traders can potentially secure a better price than what is currently available on the market.

Disadvantages:

• No guarantee of execution: If the market price does not reach the specified price, the order will remain unfilled.
• Execution delay: Execution can take time, making limit orders less suitable for quick market entries or exits.

Limit orders are especially useful for those who want to trade at predetermined price levels and are not in a hurry to make a deal at the current market price.