What is Limit Order

A limit order is an instruction to buy or sell a cryptocurrency at a specific price or better rather than accepting whatever the current market price happens to be. Limit orders give traders control over execution price at the cost of execution certainty your order may not fill if the market never reaches your specified price.

HOW LIMIT ORDERS WORK

Buy Limit Order: You specify the maximum price you are willing to pay. Your order sits in the order book until the market price falls to your limit price or below, at which point it executes.
Example: Bitcoin is at $92,000. You place a buy limit order at $88,000. Your order will only execute if BTC drops to $88,000 or lower. If BTC never drops that far, your order remains unfilled.
Sell Limit Order: You specify the minimum price you are willing to accept. Your order sits until the market rises to your limit price or above.
Example: You own BTC at $92,000 and place a sell limit order at $100,000. It executes only if BTC reaches $100,000 or higher.

LIMIT ORDER VS. MARKET ORDER

Market Order: Executes immediately at the best available current price. Guarantees execution but not price you pay the spread and accept slippage.
Limit Order: Specifies exact price. Guarantees price but not execution the market must reach your price. No slippage risk.

MAKER AND TAKER FEES

Limit orders that sit in the order book and add liquidity are called "maker" orders on most exchanges, makers pay lower fees (0%-0.1%) or even receive rebates. Market orders that immediately fill against existing orders are "taker" orders and typically pay higher fees (0.05%-0.1%). Using limit orders instead of market orders consistently reduces trading costs significantly.

ADVANCED LIMIT ORDER TYPES

Stop-Limit Order: Triggers a limit order when price reaches a stop level combining stop-loss protection with price control. Time-in-Force options: GTC (Good Till Cancelled stays until filled or manually cancelled), IOC (Immediate or Cancel — fills what it can immediately, cancels the rest), FOK (Fill or Kill — must fill entirely immediately or cancel completely).

Terms in addition to the Limit Order

Blockchain

A blockchain is a subset of a distributed database. The Bitcoin inventors originally prototyped the system in 2008. This modern database is made up of separate blocks that are connected together in a chronological chain. Blockchains may be used to store a wide range of data types. It has mostly been utilized as a public ledger for bitcoin transactions to date. A peer-to-peer network comprised of independent nodes uses a consensus process to ensure the blockchain's security and legitimacy. Each node in the network keeps a public and immutable copy of the data.

2 Factor Authentication (2FA)

2 Factor Authentication is a security measure with two layers. It is used by the majority of cryptocurrency exchanges. To log in, you must provide not only a password, but also a code obtained, for example, from the Google authenticator.

Airdrop

An airdrop is a method of distributing coins. End users can typically obtain coins for free or in exchange for doing a small task, such as subscribing to a newsletter, sending a tweet, or inviting others via a personal affiliate link. Cryptocurrency airdrops — the act of depositing cryptocurrency into public crypto wallets — are utilized as a marketing, liquidity creation, and network bootstrapping technique for many different types of blockchain initiatives.

Altcoin

Altcoin - "alternative coin" - is any kind of digital currency other than Bitcoin. Since the launch of Bitcoin, the world's first digital currency, many altcoins (as well as supporting blockchains) have been created. Altcoin digital currencies share many similarities to Bitcoin, but consistently and have significant differences. There are about 20,000 altcoins, and this number is expected to grow significantly in the coming years. Altcoins often develop Bitcoin features. Ethereum, currently the most widely used blockchain, supports digital contracts and separate applications where Bitcoin does not. Altcoins are also often created to cater to the needs of different users. The Litecoin blockchain, for example, can process payments quarterly for the duration of Bitcoin.

Cold Storage

Cold storage is the way to store cryptocurrency offline. The word refers to the use of offline wallets that are not connected to the internet. Cold storage is the most secure way to keep cryptocurrencies since an offline currency becomes less likely to be hacked and stolen. Paper wallets, printed renditions of private keys, and offline hardware and software wallets are all examples of cold storage.