A limit order (Limit order), also called a pending order, is an order to buy or sell a certain amount of cryptocurrency at a predetermined price or better. Unlike a market order, it is not executed instantly: the order goes into the exchange order book and waits until the market reaches the specified level. This gives the trader full control over the entry or exit price but does not guarantee execution.
Limit orders form the structure of the order book. The best sell order, closest to the current price, is called the ask (Ask) or offer (Offer). The best buy order is called the bid (Bid). The difference between them is the spread: the narrower it is, the more liquid the market and the lower the cost of entering and exiting a position.
When limit orders are used
- to buy at a more favorable price than the current one;
- to take profit at a predetermined level;
- to add liquidity and reduce trading costs.
A limit order suits traders who are willing to wait for the desired price and do not want to overpay for immediate execution. The main trade-off is that the order may remain unfilled if the market does not reach the specified level.
