Limit Vs Market Orders: Which Should You Use?
When buying and selling crypto on an exchange, there are generally two types of order you can place: Limit orders or Market orders.
If you’re using TimeX’s Convert feature, there’s no need to worry about these order types. But if you’re using Advanced mode, you’ll need to understand the differences between Limit and Market orders and place the right one for your needs. If you use the wrong kind of order, it’s likely that it will execute at the wrong price, or else potentially not execute at all.
The basic difference between the two options is that a limit order gives you a guaranteed price, while a market order gives you guaranteed completion.
Market Orders
A market order means you’re buying or selling ‘at market’: taking the best price that’s available, and trading based on what the order books hold right at that moment. You don’t specify the price, you just take what you can get. You can think of a market order as executing a trade at any cost.
Pros:
- Instant trade execution
Cons:
- You can’t control the price, only take what’s on offer at that time
- It’s possible the market will move as you’re making the order, meaning the price you get is different to what it appears to be when you click Buy or Sell
Use market orders when time is important and you need to execute a trade fast. It’s generally also fine to use a market order when the market has deep liquidity, or you’re trading small amounts, meaning that slippage won’t be an issue.
Limit Orders
A limit order is a trade that will only execute when the market reaches a certain price. For example, you may want to buy a crypto when it falls to $10, or sell when it rises to $20. If the price does not hit your limit, then the trade will not occur.
Pros:
- Your order will only be filled at the price you specify
- You won’t be affected by slippage
Cons:
- There’s no guarantee your trade will execute, since the market may not hit your target price
- Your order may not execute in full if there aren’t enough buyers or sellers at your limit price
Use limit orders when you want to be sure a trade executes at a specific price (if at all). Limit orders are useful if you want to ‘set and forget’ a trade, or if you think the market may hit your target price overnight or when you’re away from your screen. They’re also good for larger trades or in illiquid markets, when you want to avoid slippage.
Convert functionality on TimeX
TimeX’s Convert feature executes a market order, meaning you’re buying or selling based on the current order book. You’ll be shown the price you’ll get for the amount of crypto you want to trade before you confirm the order.
If you want to place a limit order, use When buying and selling crypto on an exchange, there are generally two types of order you can place: Limit orders or Market orders.
If you’re using TimeX’s Convert feature, there’s no need to worry about these order types. But if you’re using Advanced mode, you’ll need to understand the differences between Limit and Market orders and place the right one for your needs.
The basic difference between the two options is that a limit order gives you a guaranteed price, while a market order gives you guaranteed completion.Advanced Mode, where you can see the order books, as well as use different charting tools to help you forecast likely price changes.
