Basic Knowledge in Cryptocurrency: Difference Between Limit and Market Orders

Limit orders and market orders are two main types of order placements in securities trading. Their core difference lies in price constraints and execution priority:

1. Price Constraints

Limit Orders: Investors specify a fixed price (or a better price), requiring the broker to execute at that price or more favorable.

Buy Limit: Execution price ≤ order price (e.g., order at 10 yuan, actual execution not exceeding 10 yuan).

Sell Limit: Execution price ≥ order price (e.g., order at 10 yuan, actual execution not less than 10 yuan).

Advantages: Control costs or profits, avoid price fluctuation risks.

Disadvantages: If market prices do not reach the limit, execution may not occur.

Market Orders: Investors do not specify a price, requiring the broker to execute immediately at the current best market price.

Advantages: Fast execution, suitable for urgent buying or selling.

Disadvantages: Actual execution price may deviate significantly from expectations (especially during volatile periods).

2. Execution Priority

Market orders are prioritized over limit orders because they do not have price restrictions.

Limit orders need to wait for market prices to meet the conditions, which may fail due to insufficient liquidity or if the price does not reach the set level.

3. Applicable Scenarios

Limit Orders: Suitable for investors sensitive to price and wishing to precisely control costs.

Market Orders: Suitable for investors seeking quick execution and accepting market price fluctuations.

4. Risk Comparison

Limit Orders carry the risk of non-execution if prices do not meet the set conditions.

Market Orders carry the risk of uncontrollable execution prices (e.g., buying at high prices or selling at low prices during extreme market conditions).

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