What is a limit order?
A limit order is an order to buy or sell at a specified price or better. For a buy, the limit is the highest price the trader is willing to pay; for a sell, it is the lowest price the trader is willing to accept. A limit order constrains execution prices but does not guarantee execution.
How does a limit order work?
After a trader submits the side, quantity and limit, the trading system matches the order against existing quotes. This process is called matching. The order book records unfilled buy and sell quotes and quantities.
The system processes orders according to price and quantity:
Suitable quotes and sufficient quantity: the whole order fills.
Suitable quotes but insufficient quantity: part fills first, and the remainder usually waits in the book.
No suitable quotes: nothing fills yet, and the order usually joins the book to wait.
The following hypothetical spot sell orders are priced in USDT, with quantities in units of the same asset. For clarity, assume quotes remain unchanged during matching and the order can execute normally.
Ask price (USDT) | Quantity |
|---|---|
100 | 2 |
101 | 3 |
102 | 5 |
A limit order to buy 6 units with a limit of 101 USDT first buys 2 at 100 and then 3 at 101. The remaining unit cannot be bought at 102 because that exceeds the limit. It stays in the book waiting for a sell order priced no higher than 101.
This illustrates two points: the limit is not necessarily the actual execution price, and an order may fill only partially if eligible quantity is insufficient. For selling, the direction is reversed: only bids at the limit or above are acceptable.
Unfilled quantity may be canceled under platform rules. Canceling the order does not reverse portions already executed.
How does a limit order differ from a market order?
A limit order specifies acceptable prices first; a market order attempts to execute as quickly as possible at currently available quotes. The difference is not which is always faster, but whether the trader sets a price limit.
Against the same sell orders above, a market order to buy 6 units would continue to buy the final unit at 102 and complete the quantity, provided no platform trading restriction is reached. The buy order with a limit of 101 would not accept that price.
Comparison | Limit order | Market order |
|---|---|---|
Price limit | Sets a maximum buy price or minimum sell price | Sets no execution-price limit |
Execution | Matches opposite-side quotes at the limit or better | Attempts to match the best currently executable quotes in sequence |
Main trade-off | Constrains price, but may wait or fail to fill in full | Prioritizes execution, but prices may differ from expectations |
A limit order can also fill immediately if existing quotes meet its price and quantity requirements. A market order is not guaranteed to fill either: insufficient quotes, price protection or quantity limits can also prevent full execution.
What else matters for execution and fees?
The latest traded price shown in market data records a transaction that has already occurred. It does not establish that enough quantity remains at that price for an order. Check execution records to determine whether an order filled, rather than only whether market prices touched the limit.
A limit order does not necessarily incur the maker rate. A portion that immediately trades against existing quotes is taker; a portion that waits first and is later executed by another order is maker. Fees depend on actual executions and applicable rates and are not included in the price limit itself.
Related terms
Explore market orders, slippage, and the special execution conditions of IOC orders and FOK orders, or return to the crypto glossary.
References
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