Market Orders vs Limit Orders: Now, or at Your Price

At 4.13 on a Tuesday morning, while you were asleep, you bought two coins, not the five you had asked for. Two. Three weeks earlier you had told the exchange you would pay £99 each and not a penny more, and then you forgot the order existed. Overnight somebody sold into a quiet market, the price dipped through your number, and your order was sitting there waiting. It filled. It would have filled whether or not the price kept falling all week.

That is a limit order doing exactly what it was told. This guide walks the two basic order types through one small imaginary order book so you can see the machinery. Mechanics only, not financial advice, and no opinion on which type you should use.

One screen, two queues

Rewind three weeks, to the afternoon you placed that order. The coin is made up and the prices are toy-sized to keep the arithmetic easy. Real books for bitcoin or ether work the same way, just with more zeroes and more rows.

A crypto exchange is a matching engine with an app wrapped around it. It keeps a queue of buyers and the prices they will pay (the bids) and a queue of sellers and the prices they want (the asks), and together these make the order book. That afternoon the cheapest seller wanted £100 and had five coins on offer. More sellers waited behind at £101 and £103, and the keenest buyer was bidding £98.

The gap between the best bid and the best ask is called the spread, and here it was £2.

Your £99 goes in the queue

You wanted five coins and decided £100 felt like £1 too much, so you typed a price instead of accepting one. A limit order tells the exchange: this price or better, or nothing. Your bid for five at £99 landed in the book and the book changed shape, best bid £99, best ask £100, spread down to £1.

This is the bit beginners tend to miss. You did not take a price that afternoon. You made one. Every resting order in every order book is somebody doing the same thing.

Then you closed the app and got on with your day.

Someone else pays up

Ten minutes later another buyer arrived, someone who cared more about getting the coin than about the last pound. A market order tells the exchange: fill me now at whatever the book offers. The engine matched it against the cheapest ask and the trade printed at £100. One tap, done.

Now count what the hurry cost: suppose that buyer regretted the purchase immediately and sold straight back with another market order. The best bid in the book at that moment was your £99: in at £100, out at £99. They lost £1 in under a minute and nothing malfunctioned, because crossing the spread is priced in, it is just priced in quietly.

Size makes the cost heavier, because the £100 level held five coins. A market buy for twelve coins takes those five, then five more at £101, then two at £103, for an average near £100.92 against the £100 showing on the screen when the buyer tapped. That gap is slippage, which has its own guide on this site, and large orders in thin books pay for speed on every unit.

Fee tables notice the difference as well: orders that rest in the book add liquidity, so exchanges call them maker orders and often charge them a lower fee. Orders that consume resting offers are taker orders and often pay a little more, usually a fraction of a percentage point. Check your venue's fee schedule, because schedules vary between exchanges and get revised without much announcement.

Partly filled, mostly patient

Your £99 bid, meanwhile, just sat there, and resting orders queue by price first and then by arrival time, so any later £99 bid stood behind yours. Nothing about the arrangement needed you awake, online or paying attention.

Which brings us back to 4.13am, when sellers leaned on a thin book overnight, the bids above yours were taken out first, and your £99 found itself at the front of the queue. Two coins hit it, so you now owned two, and the order for the remaining three stayed working, because a limit order is allowed to fill in pieces. Most exchanges default new orders to good till cancelled, which means what it says: the remainder can rest for weeks if the price never returns.

The other outcome is that it never fills at all. Run the tape upward instead, £100 climbing to £140 over the month, and your £99 bid buys nothing the whole way. Cancelling costs nothing before an order fills, but plenty of people forget theirs exist, so check the open orders tab now and then.

Four in the morning is a trading hour

Crypto never closes: no opening bell, no weekend, no circuit breakers, hundreds of venues matching orders around the clock. That is the only reason your purchase could happen while you slept. The venue that filled you at 4.13 was the same venue it had been at lunchtime, only quieter and thinner.

The clock cuts both ways: in May 2021, when China announced fresh crypto restrictions, bitcoin fell around 30 per cent inside a day. Books gapped, meaning prices jumped whole levels rather than walking down through them. A limit buy in a fall like that keeps its one promise, that you will not pay above your number, so it can still fill at £99 while the market is on its way to £80. The order cannot read the news, it knows the number you gave it and nothing else.

News ignores the clock too: on 9 January 2024 a hacked post on the US securities regulator's X account falsely announced that spot bitcoin ETFs had been approved. Prices whipped around in minutes, resting orders filled, and the genuine approval only arrived the next day. Everything that filled during the whip stayed filled.

One relative deserves a single mention: the stop order, which lies dormant until the market touches a level you choose, then fires off a market or limit order on your behalf. That is all this guide will say about it.

Where the order book does not reach

Here is a wrinkle most beginners meet late: your first crypto purchase probably never touches an order book at all.

Buying through an on-ramp is a quoted-price model rather than an auction. The service shows a number, you approve it, you pay it. Banxa has run that plumbing since 2014, with 100-plus payment methods across 100-plus countries, and locks each quote for roughly three minutes in the markets it serves. There is no spread to cross and no depth to misjudge, and the full price sits in the quote before you tap. Order types enter your life later, once your coins sit on an exchange and you start trading them there.

The trade before the trade

Strip everything back and you are left with one choice. A market order gives you certainty that the trade happens, at whatever price the book holds in that second. A limit order gives you certainty about the price, and in exchange the fill might arrive at 4am, in pieces, or never. No order type offers both certainties at once.

Which fits a given moment is your call, not this guide's. Either way, read the confirmation screen before you tap. The book will not give it back.