Market order vs limit order

A market order buys or sells straight away at the best price available. A limit order buys or sells only at a price you set, or better. One guarantees that the trade happens. The other guarantees the price.

Side by side

Market orders

A market order is the simplest order and the default in most apps. It takes whatever offers are in the order book.

The catch is the price. In a fast market, or with a thinly traded coin, the order can fill at a worse price than the one on your screen. That difference is called slippage.

Limit orders

A limit order names your price. A buy limit at $90,000 will never pay more than $90,000.

The catch is the reverse. If the market never reaches your price, nothing happens.

Fees

Many exchanges charge less for an order that adds to the order book, called a maker order, than for one that takes an existing offer, called a taker order. A limit order that waits is usually a maker order.

Simple "instant buy" screens are a third case. They often show no fee and build their margin into a worse price. Lesson 15 shows how to work out the real cost.

Which to use

• A widely traded coin, a small amount: a market order is quick, and the price will be close to what you saw.
• A thinly traded coin, or a large amount: a limit order protects you from a bad fill.
• A price you are waiting for: a limit order waits for you.

A stop order is different again. It waits until the price reaches a level you choose and then becomes a market order, so its price is not guaranteed either.