Limit order
A limit order is an instruction to buy or sell at a price you name, or better. It waits in the book and may never fill, but if it fills it does so on your terms, with no slippage.
How it works
You name a price and a size. The order joins the book and waits for the market to reach it. Until a counterparty appears nothing happens: the funds are reserved but no trade exists.
It can fill in parts when there is not enough on the other side. Part of the order trades and the remainder keeps standing at the same price.
Limit orders add liquidity to the book, so exchanges usually charge less for them than for market orders, which take liquidity away.
Limit or market
The same size on a thin pair, executed two ways.
| Market: fill | immediate |
| Market: price | worse than screen |
| Limit: fill | may not happen |
| Limit: price | exactly yours |
A market order pays for speed in slippage; a limit order pays for price with the risk of no fill. On a liquid pair the difference is pennies; on a thin one it is the whole trade.
How to use it
- Default to limitWhen a trade is not urgent, a limit order is almost always cheaper: you pay neither the spread nor slippage.
- Check the expiryOrders come as good-till-cancelled or day orders. A forgotten one can fill in an entirely different market.
- A stop-loss is not a limit orderA stop triggers at a price and often converts to a market order, meaning it fills with slippage.
- Split large sizeSeveral orders across price levels fill more often than one large order at a single level.