What is a limit order?

Want to make a trade, but not at whatever price you can get? Imagine leaving this instruction at a store: “If the item costs up to €100, get me one.” You’ve set a limit on how much you’re willing to pay, not a deadline by which the purchase must happen no matter what.

How it works in practice

On an exchange with an order book, you set the cryptocurrency, the quantity and the price. When buying, your price is the maximum amount per unit you’re willing to pay. When selling, it’s the minimum amount you’re willing to receive.

Suppose a token is trading at €105 and you place a limit order to buy 10 tokens at €100. The order can only fill at €100 or lower. If only 4 tokens are available at an acceptable price, those may be bought and the remaining 6 stay open, depending on the order settings.

Not every limit order has to wait. If the price you set allows a trade with orders already sitting on the other side of the book, it can execute right away.

Why it matters

The difference from a market order is the priority: with a limit order you put the price limit first, while with a market order you ask for immediate execution at the available prices. We find it useful to remember it this way: you control the acceptable price, not whether the trade happens.

What to watch out for

The price on the chart touching your limit doesn’t guarantee execution. Other orders may be ahead of yours, or there may not be enough quantity available. Also check how long the order stays valid and the fees, which affect your final cost beyond the execution price.

Don’t confuse it with a stop loss: a plain limit sell order doesn’t trigger automatically only when the price falls below a certain level. If you set a sell limit below the available bid prices, it may execute immediately.