There are three types of orders in the trading world. There is the Market order, the Limit order and the Stop-limit order. Right now we'll be looking at the Limit order, so let's jump straight into it;
A Limit order is an order that you make on the order book with a specific price determined by you. What this means is that if you place a Limit order, the trade will only be executed if the market price of the coin reaches your limit price (or better). Many traders use the limit orders when trading because it allows you to buy at a lower price or to sell at a higher price than the current market price at which it is trading.
The Limit orders do not get executed immediately like the market price, because you have to wait for it to either go up to your sell price or come down to your buy price. For instance, if Bitcoin is trading at the price of $5,000 and I wanted to buy it when it drops to $4,500, I would just set a limit order to buy it when it got to that price and voila I can go sleep.
Limit orders like I have said above are used when you are not in any hurry to buy or sell. Your ask/bid price has to be met before your order will be executed on the order book. One of the biggest benefits of the Limit order is that it allows you to get better selling and buying prices and if you carry out your technical analysis well enough you can record some major wins.
Many see a Limit order as the smartest order type to use because with a Limit order you don't suffer “slippages”, you choose the price you want to sell or buy the coin. Because Limit orders aren’t subject to slippage, you will either get a better price, or the price you asked for. The disadvantage of using a Limit order however is that if you try to take profits, and you set your limit too high or too low you may miss out on an opportunity to secure the profit you have already made. Limit orders are a great way to save you from the stress of checking regularly if your order has been filled like in a Market order, all you would do will be to set the Limit order and go do something else.
