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What are Market Order and Limit Order, and How to Place Them

2021-07-08 12:21
There are two main types of orders when trading cryptocurrencies: market orders and limit orders. A market order is an instruction to buy or sell an asset immediately (at the market’s current price), while a limit order is an instruction to wait until the price hits a specific or better price before being executed. Let’s see how they work and how to place them on Binance.

What is a market order?

A market order is executed at the current market price as quickly as possible when a user places the order.
When placing a market order, you can select [Amount] or [Total] to buy or sell.
For example, [Amount] is recommended when you want to buy or sell BTC with a certain quantity. However, if you wish to buy BTC with a certain amount of funds, such as 10,000 USDT, placing a market order with [Total] is a better option.
In general, you can use both functions to place your buy and sell orders. However, when you place the orders after the system calculates the amount you can get, the asset price might have changed significantly, and the orders would fail. This often occurs when the buy/sell ratio is close to or equal to 100%.

How to place market buy orders?

1. By Total
Suppose you own 1,000 USDT and want to place a market order for BTC/USDT. When you place a “Buy 100%” order, the system will execute your order at the current market price according to the amount of USDT you have, but it is uncertain how many BTC you can buy. The final BTC transaction amount is determined by the market price and quantity when the order is placed. You can check the amount of BTC purchased and the average price from [Order History].
2. By Amount
For example, you own 100,000 USDT, and the price of BTC/USDT is fluctuating around 34,105 USDT. When you place a “Buy 100%” order, the system will match your order with the sell orders on the market to determine how many BTC you can buy.
If the system calculates that you can buy 2.932401 BTC with 100,000 USDT and you click to place the buy order, but at the same time BTC price increases, meaning that 100,000 USDT can no longer buy 2.932401 BTC, your order will fail. You can place another order by manually editing the amount of BTC to buy, or using the [Total] function instead.

How to place market sell orders?

1. By Amount
Suppose you own 100 BTC and want to sell 50% with a market order. The amount of USDT from selling this 50 BTC will be determined by the current market price and quantity when you place the order. You can check the amount of USDT obtained from the order and the average selling price from [Order History].
2. By Total
For example, you own 0.06272BTC, and the price of BTC/USDT is fluctuating around 33889.26 USDT. When you place a “Sell 100%” order, the system will match your order with the buy orders on the market to determine how many USDT you can obtain.
If the system calculates that you can sell 0.06272BTC for 2125.534 USDT and you click to place the sell order, but at the same time BTC price drops, meaning that 0.06272BTC can no longer sell for 2125.534 USDT, your order will fail. You can place another order by manually editing the amount of USDT to get, or use the [Total] function instead.

What is a limit order?

A limit order is an order you place on the order book with a specific limit price. It will only be executed if the market price reaches your limit price (or better). You may use limit orders to buy an asset at a lower price or sell at a higher price than the current market price.

How to place a buy limit order?

1. Click [Trade] - [Spot] and select the trading pair. Go to the [Spot] box and click [Buy] - [Limit].
2. Enter the price you want to buy. For example, you want to buy BTC at 41,000 USDT.
3. You can enter the amount of BTC to buy directly next to [Amount].
Alternatively, drag the bar above [Total] to customize the percentage of Spot Wallet balance to use for the order. For example, you own 10,000 USDT and you want to use 50% of it to buy BTC. Drag the bar to 50% and the system will automatically calculate the amount of BTC you can get with the limit order.
4. Click [Buy BTC] to place the limit buy order. Once the market price reaches your limit price (or better), your limit order will be executed.

How to place a sell limit order?

1. Click [Trade] - [Spot] and select the trading pair. Go to the [Spot] box and click [Sell] - [Limit].
2. Enter the price you want to sell For example, you want to sell BTC at 41,000 USDT.
3. You can enter the amount of BTC to sell directly next to [Amount].
Alternatively, drag the bar above [Total] to customize the percentage of BTC to sell. For example, you own 1 BTC and you want to sell 50% of it only. Drag the bar to 50% and the system will automatically calculate the amount of USDT you can get with the limit order.
4. Click [Sell BTC] to place the sell limit order. Once the market price reaches your limit price (or better), your limit order will be executed.

How to view my order history?

You can view your open orders under [Open Orders]. To cancel an order, click on the bin icon next to it.
You can check your filled orders under [Trade History].