How a limit order works
The trader gives a side, a quantity and a limit price. If orders on the other side of the book already meet that price, the limit order trades against them at once, at their prices. Whatever is left rests in the book at the limit price, behind earlier orders at the same price.
A resting order can be filled in full, in parts as counterparties arrive, or not at all. The order stays until it is filled, cancelled or expired under its time-in-force instruction:
- Good till cancelled (GTC): stays until filled or cancelled
- Immediate or cancel (IOC): fills what it can at once and cancels the rest
- Fill or kill (FOK): fills completely at once or not at all
- Post-only: is rejected if it would trade at once, so it always rests as a maker
Why limit orders matter to an exchange
Resting limit orders are the order book: they are the liquidity that market orders trade against. Exchanges reward them with a lower maker fee.
For the platform, a limit order ties up money. The funds or assets needed to settle are placed on hold in the ledger when the order is accepted and released when it is cancelled, so an order can never fill without cover.
Limit order or market order?
- Market order
- Trades at once at the best prices available. The trade is certain and the price is not.
- Stop order
- Waits for a trigger price, then becomes a market or a limit order.
Where a limit order shows up in a platform
Modules that do the work
- Matching engineA low-latency order book for spot markets, with market makers and outside liquidity.
- LedgerThe double-entry book of record behind every balance, fee and transfer.
- Market dataLive and historical prices for crypto, stocks and FX, from the data vendors you choose.