Market Orders vs. Limit Orders: What's The Difference?
Last updated
Last updated
On the order (or buy/sell) panel, you can place the following types of orders:CommentShare feedback on the editor
CommentShare feedback on the editorMarket Order: Executes immediately at the best available market price at the time of placement.
CommentShare feedback on the editorLimit Order: Allows you to set a specific price at which the order will be executed.
CommentShare feedback on the editorStop-Limit Order: Lets you define a stop price. If the market price reaches this stop price, the order is triggered and executed at the specified limit price or better.
CommentShare feedback on the editorThese order types provide flexibility in how you enter and exit trades, catering to different trading strategies and risk management preferences.CommentShare feedback on the editor
A market order is an instruction to buy or sell immediately at the best available market price. Once placed, market orders cannot be canceled as they are executed instantly. These orders may be partially filled at multiple prices, and each portion of the order will be displayed in the Order panel beneath the Price Chart.CommentShare feedback on the editorKey Points to Remember:CommentShare feedback on the editor
CommentShare feedback on the editorMarket orders are always considered taker orders because they are executed immediately, removing liquidity from the market.
CommentShare feedback on the editorThere is no guarantee that a market order will be filled at the exact price you see when placing the order.
CommentShare feedback on the editorDuring periods of extreme market volatility, the execution price of a market order may differ significantly from the last traded price. Users should carefully monitor market depth and price fluctuations. For instance, a market buy order placed when the last trade price is 4,000$ might only fill at prices below 4,400. Protection mechanisms are in place to prevent large orders from experiencing more than 10% slippage.
A limit order is a buy or sell order that executes at the specified price you set or a better price. Limit orders also offer additional options, such as expiration and execution instructions. For a buy limit order, the limit price represents the maximum price you are willing to pay for the asset. For a sell limit order, the order will execute at the limit price or higher.
A stop-limit order allows you to automatically place a limit order to buy or sell when the asset’s price reaches a predefined value, known as the stop price. This order type is useful for protecting profits, limiting losses, or initiating new positions.
To use a stop-limit order, you must specify both the stop price and the limit price. The order will only be executed at the limit price or a better price. Once the asset reaches the stop price, the system will attempt to match your order within the order book.
However, the order will only be filled if the specified limit price or a better price (typically closer to the last traded price) is available in the market.
Note: If the limit price or a better price is not available in the order book, the order will not be triggered. To reduce the risk of this happening, the limit price should be set lower than the stop price.
