Limit vs Market Order

Limit vs Market Order

Every trade you make on an exchange uses one of two fundamental order types: a ordem limite or a ordem de mercado. Choosing the right one affects your execution price, fees, and overall trading costs.

What is a Market Order?

A ordem de mercado executes immediately at the best available price. Quando voce place a market ordem de compra, you purchase the asset at the current lowest ask price. Quando voce place a market ordem de venda, you sell at the current highest bid price.

Advantages:

• Guaranteed execution (as long as ha liquidity).
• Instant fill, no waiting.
• Simple to use.

Disadvantages:

• You have no control over the exact price you get.
• You pay the spread.
• Subject to slippage in thin or mercado volatils.
• Altaer trading fees (taker fee).

What is a Limit Order?

A ordem limite specifies the exact price at which voce quer to buy or sell. A limit ordem de compra will only execute at your specified price or lower. A limit ordem de venda will only execute at your specified price or higher.

Advantages:

• Full control over your execution price.
• No slippage.
• Baixaer trading fees (maker fee).
• You add liquidity to the livro de ordens.

Disadvantages:

• No guarantee of execution. If o preco never reaches your limit, a ordem remains unfilled.
• Partial fills are possible in low-liquidity conditions.
• Requires patience and planning.

What is Slippage?

Slippage is a diferenca entre o price you expected and o preco you actually received. It occurs with ordem de mercados, especially when:

• A ordem is large relative to available liquidity.
• O mercado is volatile and prices are moving fast.
• The livro de ordens is thin with few orders at each level.

Exemplo: You place a market ordem de compra for 10 ETH. The livro de ordens has 3 ETH at $2,000 and 7 ETH at $2,001. Your average fill price is $2,000.70, not $2,000. The $0.70 difference is slippage.

With a ordem limite at $2,000, you would only buy the 3 ETH available at that price (or wait fou mais liquidity to appear). No slippage, but potentially an incomplete fill.

Time-in-Force Options

When placing a ordem limite, voce pode specify how long it remains active:

GTC (Good Till Cancelled)

A ordem stays on the book until e either filled or you manually cancel it. This could be minutes, hours, days, or weeks. GTC is o mais common time-in-force for grid bot orders, as o bot places ordem limites and waits for o preco to reach them.

IOC (Immediate or Cancel)

A ordem attempts to fill immediately. Any portion that cannot be filled instantly is cancelled. This is useful when voce quer to buy at a specific price but do not want a ordem lingering if o preco se move away.

FOK (Fill or Kill)

The entire order must fill immediately, or e cancelled entirely. No partial fills are accepted. This is less common but useful when voce precisa all-or-nothing execution.

Post-Only

A ordem is guaranteed to be placed on the book as a maker order. If it would cross the spread and execute as a taker order, e automatically cancelled. Isso garante you always pay maker fees.

Which Order Type Do Grid Bots Use?

Grid bots primarily use ordem limites with GTC time-in-force. Here is why:

1. Buy orders are placed as ordem limites at specific nivel de grids below the preco atual. They wait on the livro de ordens until o preco cai to their level.
2. Take-profit orders are placed as limit ordem de vendas at o proximo nivel de grid above each filled buy level. They wait until o preco sobe to that point.

By using ordem limites, grid bots:

• Pay lower maker fees em vez de higher taker fees.
• Avoid slippage entirely.
• Add liquidity to o mercado.
• Execute at precise, predictable prices.

The only exception might be during bootstrap or shutdown, when ordem de mercados may be used for immediate execution.

Resumo

• Market orders execute instantly at the current best price but are subject to slippage and higher taker fees, while ordem limites execute at your specified price with no slippage and lower maker fees.
• Slippage occurs when your actual fill price differs from the expected price, most commonly with large orders in thin or mercado volatils.
• Grid bots use GTC ordem limites for precise execution at nivel de grids, ensuring lower fees and no slippage during normal operation.

Proximo Passo

A taxa difference between limit and ordem de mercados leads us to an important concept: Maker vs Taker