What are Limit Orders?

What are Limit Orders

Content provided by various contributors. DYOR.

A limit order is a type of order that allows a trader to specify the price at which they are willing to buy or sell a cryptocurrency. When you place a limit order, you are instructing the exchange only to execute your trade when the market price reaches the specified price. Therefore, the limit order will not be filled if the market price never reaches your specified price.

For example, let’s say you want to buy bitcoin and are willing to pay up to $50,000. You could place a limit order to buy bitcoin at $50,000. If the market price of bitcoin drops to $50,000 or below, your limit order will be executed, and you will be able to buy bitcoin at your specified price of $50,000. If the market price never drops to $50,000, your limit order will not be filled.

The Benefits of Using Limit Orders

here are several benefits of using limit orders:

  1. Control over price: With a limit order, you can specify the exact price you are willing to buy or sell a cryptocurrency. This gives you more control over the price you get for your trades.
  2. Better prices: Limit orders can help you get better prices for your trades, especially if you are willing to be patient. For example, if you place a limit order to buy bitcoin at a price below the current market price, you may get a better price than if you had used a market order.
  3. Risk management: Limit orders can also be used as a risk management tool. For example, you can use a sell limit order to set a target price for taking profits on a trade. If the market price reaches your target price, the sell limit order will be executed, and you will be able to lock in your profits.
  4. Reduced slippage: Slippage is the difference between the expected price of a trade and the actual price at which the trade is executed. Limit orders can help reduce slippage because they allow you to specify the price you are willing to trade. This can be especially important for larger trades, as slippage can significantly impact the overall cost of the trade.
  5. No need to monitor the market: With a limit order, you can place your order and let the exchange take care of the rest. This can be especially useful if you don’t have the time to monitor the market constantly or if you are trading while sleeping or otherwise occupied.

The Risks of Using Limit Orders

There are also some risks associated with using limit orders:

  1. No guarantee of execution: Because limit orders are only executed if the market price reaches your specified price, there is no guarantee that your order will be filled. Your order will remain unfilled if the market price never reaches your specified price.
  2. Market conditions may change: While waiting for your limit order to be filled, market conditions may change. This can result in your order being filled at a price that is not as favorable as the price you originally specified.
  3. Limited liquidity: If you are trying to place a large limit order, it may be difficult to find enough liquidity in the market to fill your order at your specified price. This could result in your order being filled at a less favorable price or not being filled at all.
  4. Market orders may be more expensive: If you are trying to buy or sell a large cryptocurrency, it may be more expensive to use a limit order instead of a market order. This is because market orders are filled at the best available price, while limit orders are only filled if the market price reaches your specified price.
  5. Fees: Some exchanges charge fees for limited orders, while others do not. Check the fees associated with limit orders on your exchange before placing an order.


Bitcoin live price
price change

Limit orders can be useful for traders who want to get the best price possible for their trades or who want to set a target price for taking profits. They can also help manage risk by allowing traders to specify a maximum price they are willing to pay for a cryptocurrency or a minimum price at which they are willing to sell.

Read more from author

Editor's picks

What Is Crypto Historical Data and How to Use It in Trading

Crypto historical data refers to past information related to cryptocurrencies such as Bitcoin, Ethereum, and others. This data includes various metrics such as price, trading volume, and market capitalization. Crypto historical data is useful for several purposes in crypto trading. First, it helps traders and investors make informed decisions by comprehensively understanding the crypto market's past performance. Crypto Historical Data Use Cases Here are some of the ways crypto historical data is used in crypto trading: Technical Analysis: Traders use…

How to Effectively Predict Crypto Prices

Predicting crypto prices is a complex task and requires a combination of technical analysis, fundamental analysis, and market sentiment. Here's a guide to help you effectively predict crypto prices: Technical Analysis: This involves studying past market data, including price and volume trends, to identify patterns and predict future price movements. Use charting tools, such as candlestick charts, to visually represent this data. Fundamental Analysis: This involves analyzing the underlying factors that may impact the value of a cryptocurrency, such as…

Guide to Value a Cryptocurrency

Valuing a cryptocurrency can be difficult and subjective, as many factors contribute to its worth. However, here are some steps and considerations for valuing a cryptocurrency: Market capitalization: This is the total value of the cryptocurrency in circulation. It is calculated by multiplying the total number of coins by the current market price. Adoption and usage: The more people use cryptocurrency, the more valuable it is likely to become. This includes individuals and businesses using it for transactions or as…

The Best Crypto Portfolio Trackers (Coin Trackers)

Crypto portfolio trackers are apps or websites that allow users to monitor their cryptocurrency holdings across multiple exchanges and wallets in one place. They connect to users' exchange and wallet accounts through APIs (Application Programming Interfaces) and automatically track the user's cryptocurrency holdings and transactions. The tracker updates in real-time and provides an overview of the user's total portfolio value, asset allocation, and returns. This allows users to track their investment performance and make informed decisions easily. What Should The…

An Overview of Different Cryptocurrency Scams

Cryptocurrency scams are fraudulent schemes that are becoming increasingly common as the popularity of cryptocurrencies continues to grow. They can take many forms and are often designed to appear legitimate investment opportunities or exchanges. Unfortunately, these scams can cause significant financial losses for individuals and harm the reputation of the cryptocurrency industry as a whole. It is crucial for anyone considering investing in cryptocurrencies to be aware of the various types of scams and to take steps to protect themselves.…

What Are Crypto Data Aggregators?

Crypto data aggregators gather data from multiple sources to provide comprehensive and real-time information about the cryptocurrency market. They pull data from various exchanges, trading platforms, and other sources to centralize the information and present it in a user-friendly format. The data includes cryptocurrency prices, trading volume, market capitalization, news, and other relevant information. Crypto data aggregators use algorithms to clean, process, and normalize the data to ensure accuracy and consistency across multiple sources. The information is then presented in…

What Is CoinGecko?

CoinGecko is a cryptocurrency data aggregator and tracking platform. It provides information and insights on the cryptocurrency market, including price, volume, trading activity, developer activity, and community growth. How CoinGecko Works Data Aggregation: CoinGecko collects crypto data from various cryptocurrency exchanges, wallets, and blockchains to create a comprehensive database of cryptocurrency information. Calculation of Metrics: CoinGecko calculates several metrics, such as market capitalization, trading volume, liquidity, and community growth, to provide a comprehensive overview of the cryptocurrency market. Display of…

What Is CoinMarketCap (CMC)?

CoinMarketCap (CMC) is a website that provides information about the cryptocurrency market and tracks the capitalization of various cryptocurrencies. It was founded in 2013 and has become one of the most popular cryptocurrency data providers. CMC aggregates information about the prices, volume, and market capitalization of cryptocurrencies from various exchanges and calculates the average value. Furthermore, the website displays this information in real-time, giving users a comprehensive overview of the cryptocurrency market. CMC tracks over 22,000 cryptocurrencies, including Bitcoin, Ethereum,…

What Are Crypto Pyramid Schemes?

A crypto pyramid scheme is a fraudulent investment scheme where returns are paid to existing investors from funds contributed by new investors. It's called a "pyramid" because it typically has many new entrants at the bottom, with each layer representing fewer investors. Example: John starts a pyramid scheme and invites five friends to invest 1 Bitcoin each. John promises to return 2 Bitcoins to each participant in a month. John needs 10 Bitcoins to fulfill his promise, so he invites…