Limit Order
In simple terms
A limit order is like telling a store you'll only buy an item if it goes on sale at a specific price. In crypto, you set the exact price you're willing to buy or sell a coin at, and the trade only happens if the market reaches that price.
Definition
An order to buy or sell at a specific price.
In depth
A limit order is a conditional instruction placed on a blockchain-based or centralized exchange that specifies both a price level and quantity for a buy or sell transaction. The order sits in the order book and is only executed when market conditions match or exceed the specified limit price (at or below for buy orders, at or above for sell orders). This mechanism protects traders from slippage and allows them to define precise entry and exit points, though execution is not guaranteed if the price never reaches the specified level. Limit orders typically incur lower trading fees than market orders since they provide liquidity to the exchange.
How does Limit Order work?
A limit order names both a quantity and the worst price you will accept — a maximum when buying, a minimum when selling. If nobody is currently offering that price, the order rests on the order book as visible liquidity instead of executing. It fills only when an opposing order reaches it, and it can fill in pieces over time if counterparties arrive in smaller sizes. Because it adds liquidity, it usually pays the lower maker fee. The trade-off is certainty of price in exchange for no certainty of execution: the market can move away and leave it unfilled.
An example
Illustrative figures: someone wants a coin trading around $100 and places a limit buy for 5 units at $95, good until cancelled. Nothing happens while the price stays above $95. Later the price falls to $94; 2 units fill at $95, then the remaining 3 fill as more sellers arrive, for $475 in total. Had the price never reached $95, the order would simply have sat there unfilled.
Figures are illustrative only.
What beginners get wrong
- Setting a limit price far from the market and assuming the trade is done; an unfilled order is not a position.
- Chasing a moving price by cancelling and re-placing repeatedly turns a price-control tool into a slower, more expensive market order.
- Partial fills catch people out — a limit order can leave you holding half the intended amount with the rest still open.
- Funds or coins are reserved while the order rests, so that balance is unavailable for anything else until it fills or is cancelled.
Related terms
Part of
How do you buy cryptocurrency safely? — the subject page for buying crypto, with all 15 of its definitions in one place.
Educational only — not financial advice.