What is a Limit Order?
A limit order is a type of trading order in cryptocurrency markets that allows traders to specify the maximum price they are willing to pay when buying or the minimum price they will accept when selling. Unlike market orders, which are executed immediately at the current market price, limit orders only execute when the specified price condition is met.
For example, if you want to buy Bitcoin but only at a price lower than the current market price, you would place a limit order to buy at your desired price. Once the market price matches or goes below that, your order will execute. Similarly, you can place a sell limit order to sell your assets at a specified higher price.
Limit orders are useful in volatile markets, allowing traders to have more control over the price at which they enter or exit positions. However, the tradeoff is that the order may never be filled if the market doesn’t reach the set price.
