Limit Order

A limit order sets the exact price at which you are willing to trade. A buy limit at 50,000 dollars for Bitcoin will only execute if the price falls to 50,000 or lower. A sell limit at 70,000 will only execute if the price rises to 70,000 or higher. Until then, the order sits in the order book and can be cancelled at any time.

Limit orders give control over price at the cost of certainty about execution. If the market never reaches your price, the order never fills. Many exchanges charge lower fees for limit orders that add liquidity to the book, which is one reason active traders prefer them.

A common use is placing buy limits below the current price during volatile periods to catch sudden dips, or sell limits above the current price to take profit automatically. Limit orders do not protect against sharp moves past the price when liquidity is thin, since the order fills at the limit price or better but the market can keep moving.