Limit orders and market orders
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 4 min
In short
A market order executes immediately at whatever price is available; a limit order names a price and waits. Market orders trade certainty of execution for uncertainty of price, and limit orders do the reverse.
Key points
- A market order fills now, at whatever price is there
- A limit order names a price and waits for it
- Market fills can land away from the quoted price
- Limit orders may simply never fill
Definition
A market order executes immediately without specifying a price; a limit order specifies the price at which you are willing to trade.
A market order sweeps the opposite side of the book from the best price outwards. It is the tool when you want to trade now, but in fast markets or with size relative to depth, your average fill can end up well away from the price you saw.
A limit order sets a condition — buy at or below, sell at or above. You get the price you chose, or nothing at all: if the market never reaches it, the order sits unfilled and the opportunity can pass entirely.
Many venues charge less for limit orders, because they distinguish between adding liquidity to the book and taking it away. Fee schedules differ from exchange to exchange, so check each venue's published rates rather than assuming.
Watch out for
- · With a thin book, a market order can fill far worse than expected
- · Limit orders can sit unfilled indefinitely — check on them after placing
- · Fee structures differ from venue to venue