When trading on Binance, users can see different types of orders. However, not everyone knows the difference and how to use these commands. The following article distinguishes among the most popular order types, Binance Limit vs Market. The next article will help you determine between Binance Limit vs Market orders and use these two orders for the best trading efficiency.
What are Market vs Limit orders for?
On Binance, there are two types of orders to complete a transaction: BUY order for one person to place an order to buy a cryptocurrency and SELL ORDER for another person to place an order to sell the same amount as other cryptocurrencies.
If one has previously used a BUY order, Trade must use a SELL order to exit. And vice versa, if one has placed a SELL order before, one must use the BUY order to leave the Trade.
Both BUY and SELL orders have order options: Market, Limit, Stop-limit. These orders allow users to choose different prices and opening hours.
- Binance Market orders allow users to open orders at the active market price.
- Binance Limit orders allow users to open orders at a predetermined price.
- Binance’s stop-limit order allows the user to terminate the order when the price reaches a preset price.
Stop – Limit Binance orders are often used to stop the loss or take profit orders. Meanwhile, Binance Market and Limit orders are often used to open orders, making it difficult for many new traders to distinguish between the two.
What is a Market Binance order?
A Binance Market order is a type of order that allows traders to buy or sell a cryptocurrency instantly at the best price. Market orders are executed immediately, so the user incurs Taker commissions. The BUY Market order is matched with the SELL Limit order on the order book to complete a transaction. Suppose a volume buy market order exceeds a pending sell order by a lower volume. In that case, the remaining purchase order is executed with the following sell order pending on the order book. This phenomenon is called slippage.
How to open a Market order on Binance Spot
To open a Market order on Binance, users must log in to their Binance account. If you don’t have an account, register using the link below:
Select Trade and click Classic or Advance (depending on the interface the user prefers to use. The tutorial is on the Classic interface. In the trading window, select Market.
Binance’s trading window shows both buy and sell orders at the same time. Depending on the trader who wants to execute the order, he will enter the volume information in that window and click Buy or Sell. The transaction will be completed immediately.
The volume section has two options: By Total or Amount to select the unit to view the transaction. The user who prefers to place orders based on the trading order can choose that unit. In addition, the fund also has a horizontal bar to select the volume of transactions made based on the percentage of activity that the user has.
What is a Binance Limit order?
A Binance Limit is an order to set the price a trader wants to execute. The trade is conducted when the market price reaches the price set at the Limit order, or there is a better price. The market price may never get the fixed price of the Limit order, so these trades may never be executed. The transaction fee of a Limit order is the withdrawal fee, so it is usually lower than the transaction fee of a Market order.
Binance may not execute Limit orders due to insufficient Market order volume. Limit orders are completed in chronological order. If multiple orders are placed at the same price, the order placed first will be executed first. If the cost of the pending order is not suitable, the pending order may remain incomplete forever and may affect the trader’s investment results.
How to open a Limit order on Binance Spot
Similar to opening a Market order, users need to log in to their Binance account, select Trade and click Classic and select Limit.
- Price: this is the price that the user wants to make the transaction.
- Amount: This is the volume of transactions you want to make.
After completing the transaction information, click Buy or Sell according to your trading strategy. The pending order you just placed is displayed in the Open Orders section.
Compare Binance limit orders with Market orders
Market orders are executed when a trader needs to enter the Market immediately instead of waiting for a specific price. Market orders are executed when a trader may not be interested in a special price or lost when his Limit order has not been completed and he must compensate for it by executing a trade immediately.
Market orders often have higher transaction fees or slippage when pending sell orders are usually placed at a lower price. So traders only use it in critical situations to avoid losing profits.
Limit orders are often used when a trader wants to execute a trade at a possible better price than the current one, which could happen in the future. The trader can set the pending price in a Limit order below or above the current price to expect the price to fall or rise in the future. Limit orders on Binance can also be set based on a percentage of the trader’s available cryptocurrency volume, helping the trader manage trades more efficiently and proactively.
Conclusion: Binance Limit vs Market Orders
Limit and Market orders are the two most used order types on Binance. However, as analyzed above, Limit orders can be more beneficial to users regarding transaction fees and order execution prices. However, if the expected price does not match, the Limit order may never be executed, affecting the trader’s investment opportunities. Therefore, users should consider and use the appropriate Binance Limit and Market orders to get the best trading performance.