How to choose between market orders and limit orders? A complete guide for traders

Every beginner trader in the cryptocurrency market quickly encounters a key decision: should they place a market order or wait for ideal conditions with a limit order? These two types of orders form the foundation of any trading strategy, and understanding them can significantly impact the profitability of your transactions.

Limit Orders – Control Over Price

A limit order is a tool for patient traders. Instead of accepting the current market price, you set the maximum price you want to pay (buy limit), or the minimum price you want to sell for. The execution of such an order depends on whether the market reaches your specified price.

Practical examples:

• If Bitcoin is trading at $100, and you set a buy limit at $80, your order waits. It will only activate if the price drops to $80 or lower.
• For selling, if Ethereum costs $100, and you set a limit at $120, your order will only be executed once the price reaches $120 or higher.

The advantage of limit orders is greater control over the price – you effectively wait for a better offer. However, sometimes you wait a long time. If the market never reaches your price, the order remains unfilled.

By placing a limit order, you generally act as a “market maker” (maker), which usually involves lower trading fees.

Market Orders – Speed Above All

A market order is the opposite of patience. Want to buy or sell immediately? You accept the best available price at that moment, and the transaction is executed almost instantly.

If Bitcoin costs $100 on the market, your market order will be filled around that price – the exact value depends on available liquidity and volatility at that moment.

Market orders are ideal for traders in a hurry or during strong price movements when waiting could mean losses. However, you always pay a “premium” – you execute at a worse price than theoretically possible. You then act as a “taker” (taker) with higher trading fees.

Costs and Efficiency – Where the Real Issue Lies

The difference between maker and taker is not just academic. Saving a few reduced fees through strategic limit orders (buy limit instead of market) can save you significant money on large positions.

If you trade values reaching tens or hundreds of thousands of złoty, the difference in fees between market and limit orders quickly adds up.

When to Use Which Type of Order?

Market orders are suitable when:

• You want to enter or exit a position quickly
• The market is highly volatile
• Liquidity is low and waiting risks a worse price

Limit orders are suitable when:

• You have a specific price target
• You are willing to wait
• You want to minimize trading costs
• You trade larger volumes

Summary

Both market and limit orders have their place in every trader’s arsenal. Limit orders (including buy limit orders for cryptocurrencies) give you control and potentially lower costs but require patience. Market orders guarantee quick execution but at the cost of higher fees and less precision.

When starting your cryptocurrency trading journey, experiment with both approaches. Over time, you will develop a sense of when each works best in your strategy.