A limit order vs market order choice comes down to one trade-off: a market order buys or sells right away at whatever price is available, while a limit order only trades at the price you set, or a better one. The first gives you speed and a likely fill, the second gives you control over the price and a risk that nothing happens. On a crypto exchange the choice also changes the fee you pay, so it is worth understanding before your first trade.
In brief
- A market order is filled immediately at the best available prices, but the final price is not known in advance.
- A limit order is filled only at your price or better, so it can wait for a long time or never be filled.
- On many crypto exchanges a limit order that rests in the order book pays a lower "maker" fee than an order that is filled at once.
- Neither type is better in every case: it depends on whether you care more about getting in or out, or about the price you get.
In this article · 11 min read
- Limit order vs market order: a short definition
- How each order works
- Maker and taker fees: why the choice also affects cost
- What the numbers say
- Limit order vs market order: the main differences
- Advantages and limits
- Where this fits: manual orders and automation
- How to start, step by step
- Checklist before you press the button
- Who it is for
- Key terms
- Frequently asked questions
- Sources
Limit order vs market order: a short definition
The US Securities and Exchange Commission (SEC) explains on its investor education site, Investor.gov, that a market order is an order to buy or sell immediately. It guarantees that the order will be executed, but not the execution price, which is generally at or near the current bid (the highest price a buyer offers) or ask (the lowest price a seller asks). A limit order is an order to buy or sell at a specific price or better: a buy limit order can only be executed at the limit price or lower, and a sell limit order at the limit price or higher. The SEC adds that a limit order is not guaranteed to execute, but it helps ensure you do not pay more than a price you decided in advance.
The same logic applies to crypto. The orders are matched in an order book, the list of all buy and sell orders waiting on an exchange. A market order takes what is already in that list; a limit order adds your own price to it.
How each order works
A market order, step by step
- You choose the asset and the amount, and press buy or sell.
- The exchange matches you with the best prices in the order book, starting from the cheapest sell order if you buy.
- If the first price does not have enough quantity, your order continues to the next one, and so on, until it is complete.
- You pay the average of the prices you received, plus the fee. The price you see on screen before you confirm is therefore an estimate.
The SEC gives a simple example in its investor bulletin on order types: an investor places a market order to buy 1,000 shares at 3.00, and 500 shares execute at 3.00 while the other 500 execute at a higher price. The difference between the price you expected and the price you actually got is called slippage. It tends to be larger when the order is big compared with the quantity on offer, and when the market moves fast.
A limit order, step by step
- You choose the asset, the amount and your limit price: the highest price you accept when buying, or the lowest when selling.
- If the market already offers that price or a better one, the order is filled at once, in whole or in part.
- If not, the order stays in the order book and waits until someone else trades at your price.
- You can cancel it at any time while it is open. Many platforms also let you choose how long it stays valid, for example until you cancel it ("good till cancelled").
Because a limit order waits for the market, it can also be only partly filled: you get some of the quantity and the rest remains open. Kraken's help centre makes this point in its guide to setting prices for limit orders: a limit price protects against slippage, but depending on the size of the orders on the other side, your order may be filled only partially.
Market order vs. limit order (Investopedia) (in English)
Maker and taker fees: why the choice also affects cost
Many exchanges use a two-tier fee system. A taker removes liquidity (the quantity available to trade) from the order book: its order is matched immediately. A maker adds liquidity: its order rests in the book until someone else trades against it. Makers are often charged a lower fee than takers, although the exact rates depend on the exchange and on your trading volume, so read the current fee page of your platform.
Kraken describes how this works for limit orders. A limit price equal to or higher than the existing sell orders, when you buy, is matched right away and pays the taker fee. A limit price lower than the lowest sell order can earn the reduced maker fee, and a "post only" option cancels the order instead of letting it be filled as a taker. A market order, by definition, is always a taker.
This is why the cheapest option is not always the best one. A limit order placed far from the market may save on fees but may never be filled, and a missed entry can cost more than a fee. Taking the fee in exchange for certainty is often a reasonable decision, especially for small amounts.
What the numbers say
Evidence on how people choose between the two comes mostly from stock markets, because that is where detailed order data is available. In the working paper "Retail Limit Orders", economists Anand, Samadi, Sokobin and Venkataraman analysed orders from 19 active US retail brokers. According to the version published by Southern Methodist University on 3 December 2024, limit orders accounted for 25.5% of orders and 29.2% of submitted shares. They also incur lower trading costs than marketable orders, meaning orders that can be filled immediately, such as market orders. In an article from the same university, the co-author Kumar Venkataraman said that about 65% of the retail limit orders in the sample were fully filled.
These are stock orders from retail brokers, not crypto, so treat the figures as an illustration of how often patient orders are used and filled. Crypto markets run around the clock and liquidity differs a lot between coins, which changes how long a limit order can take.
Limit order vs market order: the main differences
| Market order | Limit order | |
|---|---|---|
| Speed | Immediate | Only when the price is reached |
| Price | Not known in advance | Your price or better |
| Fill | Very likely, sometimes in several parts | Possibly partial, or not at all |
| Slippage | Possible, larger in thin or fast markets | Limited by your price |
| Fee on many exchanges | Usually the higher taker fee | Maker fee if it rests in the book |
| Best when | Getting in or out matters most | The price matters more than the timing |
Advantages and limits
Market order
- Simple and quick. You do not need to choose a price, and a first purchase is easy to understand.
- A fill is very likely. For liquid assets in normal conditions, you can act in seconds.
- Price uncertainty. In a thin market or a sudden move, you can get a noticeably worse price than the one on screen.
- Taker fee. It is usually the more expensive route on exchanges with maker and taker fees.
Limit order
- Price control. You never pay more, or receive less, than your limit.
- Possible lower fee. A resting order can qualify for the maker fee.
- No guarantee of a fill. If the price never reaches your level, you may watch the market move away without you.
- Attention. An open order needs to be reviewed or cancelled if your view changes.
In our own trading, the mistake we see most often is not choosing the wrong type once, but using the same one every time. A market order in a calm moment is usually harmless. The same order during a sharp fall can be an expensive surprise.
Where this fits: manual orders and automation
Choosing an order type by hand is a skill, and it is one of the parts of trading that rewards a clear rule: for example, "market order only for small amounts on liquid assets, limit order for everything else". In Lazy Investor, Smart Investor (see the book on Amazon), John Bax lists spreads, commissions on many trades and slippage among the hidden costs of frequent trading, and defines slippage as the difference between the price you expect and the price your order actually fills. His point is that these small costs quietly add up when you trade often, which is one more reason to know which order type you are sending.
Our guide to the crypto trading bot explains how automated trading works. Crypto Go Bot, which we built, trades your own Kraken account, and according to its page the take profit and stop loss of each position are real orders on Kraken. That is the same logic as this article applied to exits: an order resting on the exchange does its job even when you are not looking. Trading always carries risk, and an exit order placed as a market order can still be filled at a different price in a fast market. Our article on stop loss and take profit covers that case, and grid trading shows a strategy built entirely from limit orders.
How to start, step by step
- Open the order form on your exchange and find the "market" and "limit" tabs. If you are new to exchanges, start with how to buy cryptocurrency safely.
- Look at the order book and the spread: the gap between the best buy and the best sell price. A wide gap means a market order will cost more.
- Try a very small market order to see the real fill price and the fee.
- Place a small limit order a little below the current price (for a buy) and note whether it fills and how long it takes.
- Check the fee page to see the difference between maker and taker for your account.
- Write your own rule, for example when you use each type, and review it after a few trades.
Checklist before you press the button
- I know whether I am sending a market or a limit order.
- I have looked at the spread and at how much quantity is available near the price.
- For a limit order, I know how long it stays valid and how to cancel it.
- I have considered the maker and taker fee, not only the price.
- The amount is one I can afford to lose, because crypto is volatile and past results do not guarantee future ones.
Who it is for
Understanding the two order types helps anyone who buys or sells on an exchange, in different ways.
- Beginner making a first purchase: a small market order is the simplest way to see how a trade works, as long as you check the price shown and the fee before confirming.
- Patient buyer building a position over time: limit orders placed below the market let you decide your entry price, as long as you accept that some orders will never fill.
- Trader who needs to exit quickly: a market order gets you out fast when timing matters more than a few cents, provided the market is liquid enough.
- User of an automated tool: knowing how orders behave helps you read what the tool does for you and choose settings that fit your own tolerance for slippage.
Key terms
- Order book: the list of buy and sell orders waiting on an exchange, sorted by price.
- Slippage: the difference between the price you expected and the price at which the order is filled.
- Spread: the gap between the best buy price (bid) and the best sell price (ask).
- Maker: a trader whose order rests in the order book and adds liquidity.
- Taker: a trader whose order is matched at once and removes liquidity.
- Partial fill: an order of which only part of the quantity has been executed so far.
Frequently asked questions
What is the difference between a limit order and a market order?
A market order is executed immediately at the best available prices, so it is very likely to be filled but the price is not known beforehand. A limit order is executed only at your price or better, so you control the price but the order may be filled late, partly or never.
Which is better for a beginner, a limit order or a market order?
Neither is better in every case. A small market order on a liquid asset is easy to understand, while a limit order teaches you to think about price. Whatever you choose, check the price and the fee before you confirm.
Does a limit order always get filled?
No. A limit order is filled only if the market reaches your price, and even then it can be filled only in part, depending on the quantity available. You can cancel it while it is open.
Why do market orders have slippage?
A market order takes the best prices in the order book, and if the first price does not have enough quantity it moves on to worse ones. The average price you pay can therefore be different from the price shown. Slippage tends to be larger for big orders and in fast or thin markets.
Are limit orders cheaper than market orders?
On many exchanges a limit order that rests in the order book pays the lower maker fee, while a market order pays the taker fee. A limit order that is matched immediately is also a taker. The exact rates depend on the exchange, so check its current fee page.
When should I use a market order?
When getting in or out matters more than a small difference in price, for example a small amount on a liquid asset. In a very fast or thin market a limit order can protect you from a poor fill.
Can I use both order types in the same plan?
Yes, and many traders do. They may enter with a limit order to control the price and exit with an order that is sure to be filled, or the other way round. Decide the rule beforehand and keep to it.
Sources
- SEC, Investor.gov, Types of Orders
- SEC, Investor.gov, Investor Bulletin: Understanding Order Types
- Anand, Samadi, Sokobin and Venkataraman, Retail Limit Orders, Southern Methodist University, 3 December 2024
- SMU Cox, Patience is a virtue in trading strategies of retail investors
- Kraken Support, How to set prices for limit orders
- Wikipedia, Order (exchange)
