A limit order is a type of order used when a trader wants to purchase or sell a digital asset at a specified price or better. It is used to specify a maximum or minimum price the trader is willing to buy or sell at. The order will be executed only at the limit price or a lower one for buy limit orders, while for sell limit orders, the trading platform will complete the order only at the limit price or a higher one. This stipulation allows traders to have better control over the prices at which they trade.
While the price is secured, the filling of the order is not, and limit orders will not be executed unless the asset price meets the pricing requirement of the order. If the asset does not reach the specified price, the order is not filled, and the investor may miss out on the trading opportunity. With a limit order, Traders are directing their order to fill only if the conditions are met.
Limit VS Market and Stop Orders
This can be contrasted with a market order, whereby a trade is executed at the prevailing market price without any price limit specified. A stop order is an order to buy or sell a digital asset once it reaches a specific price or worse, known as the stop price. When the asset hits the stop price, the stop order becomes a market order. The market order is executed at the best price currently available. A stop order intends to limit losses. If an asset's price moves in a direction opposite of what the investor wants, a stop order places a ceiling on potential losses.
Advantages of Limit Orders
One of the main advantages of limit orders is the ability to set a price ceiling on a purchase or a price floor for a sale, which is essential when operating in a volatile and fast-moving market or trading illiquid traded digital assets. Limit orders can be a valuable tool if your trading priority is price guaranteed and you are willing to accept the risk of partial fills or your order not being executed at all.
How to Place a Limit Order on AscendEX?
Let's say you want to buy BTC at a lower price than what is currently being bid. After logging in to your AscendEX account, choose the trading pair you want (USDT/BTC) and go to the trading page. Then, find the Limit order tab, set the price and amount, and click the Buy button.
Since limit orders placed for a trade are usually not immediately filled, traders who place an order to contribute liquidity to a market can save on fees as a market maker for posting liquidity. Ascendex's innovative tiered VIP fee & rebate structure allows users to receive significant trading fee discounts, especially for limit orders.
See the AscendEX tiered fee and rebate structure HERE.
Ascendex Users can start trading using Limit Orders HERE.