What Are Market And Limit Orders?

When it comes to crypto trading, the choice of order type plays an important role because it regulates how and when your trade gets executed. In this article, we will tell you in detail what trade orders are, explore their main types, and explain how each one works.

What Is An Order Book?

Before we talk about order types, let's first understand where they are stored. An order book is an electronic list of all active buy (bids) and sell (asks) limit orders for a certain asset, sorted by price. You can see the volume of these orders at each price level, revealing market demand and potential price movements. In simple terms, an order book is a financial tool that shows the real-time “temperature” of the market, helping traders understand supply and demand and make better-informed decisions. You can see participants’ intentions: who is willing to buy or sell an asset, at what price, and in what quantity.

You can find an order book on Cryptomus. It is divided into two parts by colors: asks are highlighted in red at the top, and bids are shown in green at the bottom. You can also choose to view only asks or only bids, depending on your needs.

What Is A Market Order?

A market order is an order to immediately buy or sell a cryptocurrency at the best available price. If you buy a cryptocurrency with a market order, you sweep away all the most profitable limit sell orders until your order is executed, thereby pushing the price of the cryptocurrency up. And when you place a market sell order, you sell the available limit buy orders from the highest price down.

The main advantage of a market order is the highest priority in execution. The order is executed immediately after it is placed, without waiting for a certain price. This makes market orders a good option for situations where speed of purchase is more important than price. For example, in the context of trading, a market order helps you open or close a position right away without missing the moment.

On the downside, the final execution price might differ from what you expected, especially during high volatility or when trading large volumes. That’s because the order fills at the best available prices in the order book, and sometimes there’s not enough liquidity at that level. This results in slippage—the gap between the expected price and the actual price your order fills at.

What Is A Limit Order?

A limit order is an instruction to buy or sell an asset at a specific price set by the trader; the price can be higher or lower than the current market value. When buying, the order will only go through at the limit price or lower. When selling, it will only execute at the limit price or higher.

This option gives traders more control over their trades and helps avoid unexpected price swings regardless of how long it takes to fill the order. For example, you want to purchase 10 SOL at $130 each, but the current market price is $146—not ideal for you. In this case, you can place a limit order to buy 10 SOL at $130 per one, and your order will be executed as soon as the exchange can find a seller with the same rate. Even if the market price reaches the value of your limit order, it doesn't necessarily mean the order will be executed immediately. There may be many orders at the same price, and the exchange might consider yours a lower priority if it was placed later. Additionally, if you set a purchase order with a large volume, the price may reach your target, but the order may still not be filled right away.

Limit orders work best when you think strategically. They're a powerful tool for managing larger trades because they lock in your preferred price. That way, you know exactly what you're paying and not a cent more, which helps minimize financial risk.

Market Order Vs. Limit Order

To better understand the difference between these orders, we have prepared a table with the main criteria:

Keep in mind the difference between orders: market ones move the order book as they are executed immediately at the best available prices, unlike limit orders, which simply "sit" in the list until they are matched. For example, if a trader wants to sell 4 SUI at market price and the order book contains buy orders for 2 SUI at $3 and another 2 SUI at $2.5, the market order will "consume" both levels — as a result, the trader will sell 2 SUI at $3 each and 2 SUI at $2.5 each, receiving a total of $11. This process effectively shifts the price, as the market order clears out available limit orders.

It is impossible to say which one is better, a limit or a market order, because they serve different purposes. If you’re following a certain strategy and you’re confident that the market is moving in your favor, a limit order may be the better choice to buy or sell an asset at your desired price. But if you need to buy or sell immediately—or close a trade without delay—a market order is the preferred option.

Understanding the difference between market and limit orders helps you strike the right balance between execution speed and price control.

Other Order Types

Beyond the basic market and limit orders, there are advanced types that allow you to automate risk control and lock in profits without constantly monitoring the chart. Let's consider three key tools: stop-loss, stop-limit, and bracket orders.

Stop-loss order

Stop-loss is an instruction to sell an asset when the price hits or falls below the specified stop level. Its main goal is to limit your losses in case the market moves against your position. As soon as the price reaches the stop level, the order turns into a market order and executes at the current price. This approach is especially useful in high volatility conditions, when even a short delay in closing a position can lead to significant losses.

Stop-limit order

A stop-limit order is a hybrid type that combines a stop price and a limit price. When the market reaches a stop level, a limit order is placed to sell (or buy) the asset, but is executed only at the specified price or better.

Let's say you hold crypto in your portfolio and you want to protect yourself from a drop. You set a stop-limit order with a stop price at $95 and a limit price at $94. This means that when the price reaches $95, a limit order is triggered to sell at $94. This setup allows you to avoid unwanted slippage, but it carries the risk of non-execution if the market moves sharply below the limit price.

Bracket orders

A bracket order is an advanced setup that includes three key orders: an entry, a take-profit, and a stop-loss. Such elements “bracket” your position from both sides—top and bottom, pre-setting the limits of profit and risk, which allows you to set two opposite limit orders in any price direction.

Additional order types, such as stop-loss, stop-limit, or bracket orders, are more suitable for experienced traders. They expand your strategy toolkit and allow you to secure profits without constantly watching the market.

We can say that market and limit orders form the basis of any trading strategy: market orders give you speed and guaranteed execution. Limit orders offer price accuracy and protect you from slippage. For traders, a smart combination of these tools unlocks effective risk and profit management: market orders work best when you're confident in price direction, while limit orders help you stick to specific price targets and avoid unfavorable swings.

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