Limit Order

A limit order is an instruction to buy or sell an asset only at a specified price or better, resting on the exchange's order book until it is filled or cancelled. A trader who places a limit buy for bitcoin at 100,000 dollars, for example, will never pay more than that price, but has no guarantee the order executes at all.

Why it matters

The limit order is the basic tool for controlling execution price. In volatile markets, the difference between a limit order and a market order can be several percent, because a market order takes whatever liquidity is available while a limit order names its terms. Resting limit orders are also what an order book is made of: they supply the liquidity that everyone else trades against.

Exchanges encourage this liquidity provision with maker fee schedules, charging less, and sometimes paying rebates, to orders that rest on the book rather than execute immediately.

In the gold vs bitcoin debate

The mechanics are identical whether the asset is a gold futures contract on COMEX or spot bitcoin on an exchange, but the trading calendar is not. Bitcoin markets run 24 hours a day every day, so limit orders can fill at 3 a.m. on a Sunday, while gold's exchange-traded sessions pause, and retail bullion buyers typically face a dealer's quoted spread with no order book at all.