Limit Order

A limit order is an order to buy or sell an asset at a specified price or a more favorable price.

For a buy order, the limit price generally represents the maximum price the trader is willing to pay. For a sell order, it represents the minimum price the trader is willing to accept.

Example

If BTC is trading around $60,000 and a user places a buy limit order at $59,000, the order should not execute above that price. It will wait for suitable liquidity or may execute partially.

Limit orders provide liquidity to the order book. Depending on exchange rules, an order that adds liquidity may be classified as a maker order.

Advantage and limitation

The main advantage is control over the maximum or minimum execution price. The limitation is that the order may never execute, or it may execute only partially, if the market does not reach the specified price.