What is Limit Order
A limit order is an order to buy or sell an asset at a specific price or better. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher.
Limit Order Example
For example, you want to buy Bitcoin at $8000. Bitcoin is currently trading at $8300, so you set a limit order to buy at $8000. The price may go up or it may go down, but you know that as soon Bitcoin trades at $8000, your order will be triggered and you'll buy at your predetermined price.
Once you buy Bitcoin at $8000, let's say you decide you want to sell at $9000. Again, you place your limit order and wait. Once Bitcoin trades at $9000, your order becomes active and will sell at your target price of $9000.
How to use
After logging in to your MTBIT account, choose the pair you want (e.g., BTC/USD) and go to the trading page. Then, find the Limit order tab, set the price and amount, and click the Buy/ Sell button.
After that, you will see a confirmation message on the screen, and your limit order will be placed on the order book, with a green dot on the same line.
At the same time, your order price will also be displayed on the chart
Why do Limit Orders matter?
By using limit orders, you can protect yourself from buying an asset at too high a price or selling at too low a price.
Note that if the price of the asset does not reach your limit price, your trade won't be executed.
- A limit order guarantees that an order is filled at or better than a specific price level.
- A limit order is not guaranteed to be filled, however.
- Limit orders control execution price but can result in missed opportunities in fast moving market conditions.
- Limit orders can be used in conjunction with stop orders to prevent large downside losses.