Limit Order On Binance
Are you having trouble deciding which order type to use when buying bitcoin (BTC) or ether (ETH)? Different order types can impact your trading in different ways. So, it is important to understand the differences between them before placing an order. If you want more control over your trading, you may consider using limit orders to limit the price at which a coin can be bought or sold.
What is a limit order?
Limit orders are orders with a certain buy or sell price. To place a limit order, you need to set the maximum or minimum price at which you want to buy or sell an asset. Then, your order will be placed in the order book and will only be executed if the market price reaches the limit price (or better).
Unlike market orders that execute trades instantly at the current price, limit orders provide more control over the execution price. Because limit orders are automated, you don’t have to watch the market 24/7 or worry about missing buying or selling opportunities while you’re sleeping.
However, there is no guarantee that your limit order will be executed. If the market price never reaches the limit price, your trade will remain unfilled in the order book. Usually, limit orders can be placed for up to several months, but this depends on the crypto exchange used.
How do limit orders work?
When sent, the limit order will be posted in the order book immediately. However, the order will not be filled unless the coin price reaches the specified limit price (or better). For example, you want to sell 10 BNB at $600, while the current price is $500. You can place a BNB sell limit order for $600. When the BNB price reaches the target price or higher, your order will be executed depending on market liquidity. If there is a BNB sell order placed in front of your order, the system will execute the order first. Your limit order will be filled afterwards with the remaining liquidity.
The thing to consider when placing a limit order is the order expiration date. Generally, limit orders can last up to 90 days. If you don’t monitor the market closely, you could end up buying or selling at less than desirable prices due to market volatility. For example, the current market price of BNB is $500 and you place a sell limit order for 10 BNB at $600. After a week, the price of BNB rose to $700. Since the market price broke the set limit price, your order was executed at $600. In this case, your profit is limited by the target price set a week ago. Therefore, you are advised to review open limit orders from time to time to keep pace with changing market conditions.
Stop-loss order vs. limit order
There are various types of orders that can be used when trading crypto, such as limit orders, stop-loss orders, and stop-limit orders.
A stop-loss order is a market order that is triggered when the market reaches your stop price. This order is used to buy or sell coins at the market price once the coin price reaches the set stop price.
When triggered, the stop-loss order will turn into a market order and be executed at the current market price. If the stop price is not reached, your order will not be executed. Sell stop orders can be used to minimize potential losses if the market moves against your position. This order can also be used as a “take-profit” order to exit a position and protect unrealized profits. Buy stop orders can also be used to enter the market at a lower price.
The difference between a limit order and a stop-loss order is that the former will be executed at the set limit price (or better), while the latter will be executed (as a market order) at the current market price. However, note that if the market price changes too quickly, your order may be filled at a price that is significantly different from the trigger price.
Stop-limit order vs. limit order
Stop-limit orders combine the features of a stop order and a limit order. Once the stop price is reached, the limit order will be triggered automatically. Then, the order will be executed if the market price matches the limit price or better. If you don’t have enough time to monitor your portfolio closely, you may want to consider using a stop-limit order to limit losses that could occur on a trade.
When placing a stop-limit order, you must specify two prices: the stop price and the limit price. The difference between a stop-limit order and a limit order is that the former will only place a limit order if the stop price is reached, while the latter will be placed instantly in the order book.
For example, BNB is trading at $600 and you place a sell stop-limit order with a stop price of $590. This means that if BNB drops to $590, the system will automatically set a sell limit order at the specified limit price (for example, $585). However, there is no guarantee that your order will be filled. If the market moves too quickly, there is a chance that your order will remain unfilled.
Stop-limit order vs. stop-loss order
Stop-limit orders and stop-loss orders are triggered based on the stop price. However, once triggered, a stop-limit order will create a limit order, while a stop-loss order will create a market order.
When to use limit orders?
You can use limit orders when:
- You want to buy or sell at a certain price other than the market price;
- You are not in a rush to buy or sell immediately;
- You want to lock in unrealized profits or minimize potential losses;
- You want to divide the order into several smaller limit orders to achieve the dollar-cost-averaging effect (DCA).
Remember that even if the limit price is reached, your order may not always be filled. It all depends on market conditions and overall liquidity. In some cases, your limit order may only be partially filled.
How to place a limit order on Binance?
Let’s say you want to buy BNB at a lower price than what is currently offered. You can place a buy limit order and set the maximum price you are willing to pay.
- Log in to your Binance account, then go to [Trading] in the top navigation bar. Select [Classic] or [Advanced] trading page. In this example, we will use [Classic].
- Navigate to the search bar on the right side of the screen, then enter “BNB”. Select the BNB pair you want to trade. We will choose [BNB/BUSD].
- Scroll down to the [Spot] box, then select [Limit]. Then, set the price and quantity you want to buy. You can also set the purchase amount by clicking the percentage button, so you can easily place a limit order for 25%, 50%, 75%, or 100% of your balance. Click [Buy BNB] to confirm.
- You will see a confirmation pop-up on the right side of the screen and your limit order will be placed in the order book.
To manage open orders, scroll down to [Open Orders]. Limit orders will only be executed if the market price reaches the limit price. If the market price does not reach the set price, the limit order will remain open.
Closing
Limit orders can be a great trading tool when you want to buy or sell a coin at a certain price. You can use it to maximize unrealized profits or limit potential losses. However, before choosing an order type, you should understand the various options and evaluate the impact each has on your overall portfolio and trading strategy. If you are interested in learning more about the different types of orders, read our Understanding the Different Types of Orders.