Limit order

Certain price, uncertain fill

A limit order rests in the book until price reaches it. You get the price you chose or better, and you accept that the trade may never happen. That trade-off is the entire decision, and it is usually the right one for a planned entry.

Because a resting order adds liquidity, it typically qualifies for the cheaper maker fee. See maker and taker fees.

The chasing trap

You place a limit. Price moves away. You cancel and place higher. It moves again. You cancel and place higher still. Three cancellations later you have a worse price than a market order would have given you, plus the time spent. If you are going to chase, chase immediately and cheaply rather than slowly and expensively.

The underlying problem is usually that the trade was not actually planned. A planned entry has a level; an unplanned one has a feeling of urgency.

Post-only, and why it exists

A post-only flag cancels the order rather than letting it fill as a taker. It guarantees the maker fee, and it means the order sometimes does not go in at all. For a fee-sensitive strategy it is worth using; for a protective order it is not.

Limit orders are not stops

A buy limit sits below price and a sell limit sits above it. Using a sell limit where you meant a sell stop puts the order on the wrong side and does nothing to protect you. This confusion is common and expensive; see stop loss.

What to do with this

• Place entries as limits at a level you chose before the session.
• If the limit does not fill, accept the missed trade. There is another one.
• Never convert a missed limit into a chase.