There are a number of ways for traders to acquire and sell cryptocurrencies on a trading platform. After selecting a trading pair, be it a crypto/fiat or crypto/crypto pair, an order form will be provided when you want to buy or sell. This order form can be further specified into two types: Market order and Limit order.
A market order is a simple command to buy or sell a cryptocurrency at the best available price on the crypto exchange. This type of order is the easiest to implement and can be executed instantaneously. All you have to do is enter how much cryptocurrency you would like to buy or sell, then the exchange will match you with an open order in the order book (list of buyers and sellers that is constantly updated).
Market orders, also known as spot orders, are suitable for traders that want to buy or sell an asset immediately, either to avoid missing a potentially profitable move or to cut their losses.
Market orders are normally best for very liquid and frequently traded assets like well-established cryptocurrencies or exchange-traded funds (ETFs).
A limit order lets you set a specific price for the order to execute. If you’re buying, you can place a buy limit order and specify a “limit price”, which is the maximum price you’re willing to pay. On the flip side, if you’re selling, you can place a sell limit order and specify a “limit price”, which is the minimum price you’re willing to accept. Limit orders are not guaranteed to execute as this type of order will only be filled if the market price of the asset reaches the specified limit price.
For instance, you might place a limit order to buy one bitcoin for $20,000, but no more. Or, you might place a limit order to sell one bitcoin for no less than $21,000.
Limit orders can let you have more control over execution price, as they can ensure that you do not pay more or receive less than a specific set price. Traders often use limit orders when they’re not in a rush or are not actively trading.
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