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Order types: what you pay for speed
A market order fills for sure but at an unknown price. A limit order fills at your price or not at all. Every choice comes down to that trade.
An order is an instruction to the exchange. In essence there are only two: "buy now, whatever it costs" and "buy if I get my price". Everything else is built on top of these two. The difference is not technical: it decides which of you — you or the market — sets the price.
Market order
You say: "take whatever is there, at any price". The exchange walks the book and collects your size. Execution is guaranteed, price is not. On a liquid coin the difference is one tick; on a thin one it is percent. A market order always takes liquidity out of the book, which is why its fee is higher (taker).
Limit order
You say: "I will buy at 0.4820 or better". The order joins the book and waits. If price reaches it, you fill at your price or better. If price never comes, you never fill. A limit order adds liquidity to the book, so its fee is lower (maker) — on some venues even negative, meaning you get paid.
What you are choosing
| Market | Limit | |
|---|---|---|
| Execution | guaranteed | may never happen |
| Price | unknown in advance | yours or better |
| Fee | higher (taker) | lower (maker) |
| When to use | you must be in the move | price will come to you |
The price of impatience
Taker fee 0.05%, maker 0.02%. You trade ten times a day, $2000 of turnover each. All market: 20 fills × $2000 × 0.05% = $20 a day, $600 a month. All limit: $8 a day, $240 a month. That is $360 a month out of nowhere — and yes, some limit orders will not fill, which is a cost too.
Stop order
A limit or market order that sits invisibly on the exchange and wakes up when price touches your trigger. A stop-market becomes a market order when triggered: it will fill, at whatever price exists. A stop-limit becomes a limit order: it fills at your price, or not at all if the market flew past.
Using a stop-limit as protection
The most expensive mistake in this lesson. You place a stop-limit to sell: trigger 63,000, limit 62,950. News hits, price drops from 63,100 to 61,800 in a second — nobody bought your limit, the order hangs unfilled, and the position keeps falling. A protective stop must be a stop-MARKET: its job is to get you out at any price, not to get you out nicely.
Take-profit
Technically the same thing on the other side of price: close the position once it reaches your target. Here the limit version is exactly right — you are in no hurry, and if price stops two ticks short of your goal, nothing terrible has happened.
Modifiers you will meet
- Post-only — the order cancels if it would execute immediately on placement. Guarantees the maker fee.
- Reduce-only — the order can only shrink a position, never open the opposite one. Insurance against an accidental flip.
- IOC (immediate-or-cancel) — fill what you can right now, cancel the rest.
- FOK (fill-or-kill) — fill the whole size or nothing.
- Trailing stop — a stop that follows price at a fixed distance.
Our paper trading has market orders, limit orders and stops — the same interface as a real exchange but without money. You can find out how a stop-limit behaves in a violent move without paying for the lesson.
Open paper tradingTest your stop in replay
Open bar replay on a day with a sharp candle down. Place a stop-limit below current price with the limit 0.1% under the trigger and run the replay through that candle. See whether it filled. Repeat with a stop-market. You will remember the difference better than this paragraph.
You want to go long if price breaks 65,000. Which order?
A stop-market buy triggered just above 65,000 if being in the move matters most. Or a limit at 65,000 if you accept missing the entry when the market flies through without a pullback. The first is more reliable, the second is cheaper. It depends on which is worse for you: overpaying, or staying out.
Why does the exchange charge makers less, and sometimes pay them?
Because limit orders are the book. Without them there is nothing to trade against: a market order would meet nothing. The exchange pays for the book to be thick and charges those who consume that thickness. Hence the names: the maker makes the market, the taker takes it.