A limit order allows traders to place a buy or sell order at a price they define. Limit orders are frequently used to place a buy order below the current market price or a sell order above it. To place a limit order, simply enter the amount of the crypto asset that is supposed to be bought or sold in the amount field and enter the price for the buy or sell in the price limit field.
By clicking on “place buy order” or “place sell order”, the system checks if the limit order can get filled immediately or if it gets added to the order book which makes the offer visible and available to all market participants.
The limit order has two advantages over a market order: First of all, in case a limit buy gets placed below the spread or a limit sell gets placed above the spread, a fill would result in a favorable realized price. Secondly, if limit orders are placed this way they are treated favorably in terms of the fee structure. In this case they are considered maker orders. Maker orders earn this rebate because they contribute to an order book's liquidity instead of depleting it. As a component of stop limit orders, limit orders play a role in risk management.