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Limit Order Meaning

Sep 21, 2023 | Updated Sep 21, 2023
A limit order is an instruction to buy or sell an asset or security at a specific price level.

What is a Limit Order in Crypto?

A limit order in crypto is an instruction that traders place on an exchange to execute a trade at a desired price level. When such an order is in place, the trade will only be executed when the cryptocurrency hits a certain price. Limit orders are different from market orders, which are trade orders executed immediately at the current market price.

For instance, let’s say you want to buy Bitcoin but it is currently trading at $32,000. You can place a limit order to buy 1 BTC at $24,000. If the value of BTC drops to $24,000, your order will be executed and you will purchase 1 BTC at that price or lower.

How Do Limit Orders Work?

When an individual places limit orders, they are essentially indicating their willingness to buy or sell a certain amount of cryptocurrency at a specific price to the exchange. If the market value reaches the specified price level, the order will be filled. If the crypto does not meet the specified price, the order will remain in the order book until it is either filled, cancelled, or expires. 

Limit orders can apply to buying or selling cryptocurrencies. A buy-limit order is only executed if the cryptocurrency’s price falls to or below the specified price. A sell limit order is only filled if the price hits or rises above the desired price.

Limit orders give traders more control over their investments by specifying the entry/exit price. This allows users to buy or sell assets at prices that are more favorable than the current market prices.

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