What is a Limit Order?
This type of order allows you to set the price at which you want to buy or sell your tokens. Limit orders allow you to set a maximum purchase price for your buy order, or a minimum sale price for your sell orders. Limit orders will only execute when the price reaches the level that has been set by the user.
What is a Market Order?
A market order is an order to buy or sell your tokens at the best available price from the order book and is executed immediately by taking existing orders from the order book.
Now, let’s look at a couple of examples of limit and market orders to familiarize you with the two types of orders.
The above picture is a limit order that is ready to be submitted and placed in the order book. This person wants to buy 50,000 SWTH tokens but only wants to spend 18 NEO for these tokens.
To begin, you would first click the “Limit Order” tab highlighted in the above picture, type in 50,000 SWTH and 18 NEO into the order table, and then the exchange would calculate your price per token. If you look at the above order table, that comes out to 0.00036 NEO per SWTH token.
Once the order is submitted, it will be placed in the order book in between the order price of 0.000364 and the order of 0.000359 and will wait to be filled. If the market price reaches 0.00036, this order will begin to fill.
Note: You can place limit orders on top of existing limit orders, and also use limit orders to fill an order instantly by being a taker. For more information on a maker vs taker order please take a look at the following article: What are Makers and Takers?
In the above picture, we are looking at a market order that is ready to be placed. To place a market order, you first click the “Market Order” tab highlighted in the above picture. Then, type in the amount of SWTH tokens you are looking to purchase. In the example above, I’ve keyed in 50,000 SWTH.
The exchange will then calculate the total amount of NEO you will be spending and the price you will pay per token based on the orders in the order book. The price per token and the total amount of NEO you will be spending are calculated from the orders in the order book that are required to fill your entire 50,000 SWTH order.
If you look at the highlighted portion of the order book above, you will see there are 11,382.24 SWTH for sale at 0.000373, 865.87 SWTH tokens for sale at the price 0.000374, and 37,757.13 tokens at a price of 0.000378.
Since we are purchasing 50,000 SWTH tokens, your order would take all 11,382.24 tokens at 0.000373, all 865.87 tokens at 0.000374, and 37,751.89 of the 37,757.13 tokens at the price of 0.000378 to complete your total order of 50,000 SWTH (11,382.24 + 865.87 + 37,751.89).
Note: If you are placing a larger sized order (50 NEO or more as example) please review the price per token before submitting the order. A market order will fill instantly from the order book, and larger orders may buy up the order book 10-30% or more.
Now let’s take a look at the pros and cons of each type of order.
You may get a better price on your tokens compared to doing a market order (if the market reaches your ask price)
If you made a maker order, you will not have to pay any fees on your trade (This only applies to maker limit orders. Taker limit orders still pay exchange fees)
Faster than a limit order. Your order executes instantly, and you receive your tokens immediately
No chance to miss purchasing the token you want
You will have to wait for your order to fill, sometimes minutes, hours, days or longer
The market may never reach the price you are asking, so your order never executes
You are paying the current market price for your tokens, even if that price is higher than you’d prefer to pay
If you are filling a big order, the price may increase up to 10 - 30% as your order fills the order book
You will be paying exchange fees since you are making a taker order