Limit Order: Wait for Execution at a Specified Price
A limit order allows traders to preset an acceptable buying or selling price, giving them greater control over the execution price; however, price control does not guarantee execution. If the market does not reach the specified price, the order may remain pending, expire, or require manual cancellation.
Basic Meaning of a Limit Order
A limit order is an instruction to buy or sell an asset at a specified price or a better price. Unlike a market order, it is not executed immediately at the best price currently available; instead, it waits for the market to reach the specified price. Therefore, it is more suitable for traders who prioritize the execution price and can accept waiting or the possibility of non-execution.
How Buy and Sell Orders Are Triggered
A buy limit order is typically placed at or below the current market price and may be executed only when the market price falls to or below that level; a sell limit order is typically placed at or above the current market price and may be executed only when the price rises to or above that level. Once triggered, it is executed at the limit price or a better price.
Price Control Does Not Guarantee Execution
If the market never reaches the specified price, the limit order will not be executed and may remain pending until it is manually canceled or expires. Even if the price briefly reaches the limit price, the evidence only indicates that the order will be triggered; it does not mean that completion of the entire trade is guaranteed under all circumstances.
Understanding Uses and Risks
A limit order can reduce the risk of the actual execution price deviating from expectations due to slippage, and can help plan entry and exit prices in highly volatile markets. It can also provide buy and sell quotes at a specific price and contribute to market liquidity, but users must still weigh the waiting time against the possibility of non-execution.
Original Tutorial
https://www.binance.com/zh-CN/academy/glossary/limit-order
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