A limit order is a directive to buy or sell a cryptocurrency at a specified price, providing control over the transaction price but not guaranteeing execution.
Understanding Limit Orders
A limit order is an order to buy or sell a cryptocurrency at a specific price. This type of order guarantees the price, but not the execution. Limit orders are used when you want to buy at a lower price or sell at a higher price than the current market rate.
How Do Limit Orders Work?
- You decide the exact price at which you’re willing to buy or sell.
- You set a limit order with your chosen price.
- The order will only execute if the market price meets your limit order price.
- If the price is not met, the order will wait in the order book.
- It remains until the price is met, or you choose to cancel.
Types of Limit Orders
- Buy Limit Orders: Set below the current market price, they execute when the price drops to your limit or lower.
- Sell Limit Orders: Set above the current market price, they execute when the price rises to your limit or higher.
Limit orders give you the power to trade with precision. By setting the price you’re comfortable with, you control your entry and exit in the market. This strategic tool ensures you don’t pay more or sell for less than you intend.