Blockchain and Cryptocurrency Beginner - Trading Terminologies: Buy limit and Sell limit

Buy limit

A buy limit order is basically a type of order that is popular and common in a lot of the top crypto exchanges. A buy limit order is used to place a buy trade to buy a particular cryptocurrency at a specific price only. For instance, a trader wants to buy 250 MATIC tokens at the price of $1.47588 when the current price of MATIC is at $1.52801, the trader would set a buy limit order that sets a condition on the exchange to only fill the buy order when the price of MATIC hits the $1.47588 A buy limit order is beneficial in certain trading situations and is mainly used by traders to place a buy trade when the trader is anticipating that the price of the cryptocurrency would fall.

Not every trader has the time to regularly monitor the market. The buy limit order becomes helpful when a trader is anticipating that the price of a particular cryptocurrency would fall but would rise again. However, the trader don’t want to miss out when the price eventually falls. The buy limit order would make the trader’s buy limit order to be filled immediately the price falls to the specified price. This is great because when the price reverses to the upside, the trader would sell and make profit.

Sell limit

A sell limit order is like the buy limit order but this time, for selling. It is basically a type of order that is popular and common as well in a lot of the top crypto exchanges. A sell limit order is used to place a sell trade to sell a particular cryptocurrency at a specific price only. For instance, a trader wants to sell 250 MATIC tokens at the price of $1.61836. The trader would set a sell limit order that sets a condition on the exchange to only fill the sell order when the price of MATIC hits the $1.61836.

A sell limit order is very useful and is mainly used by traders to place a sell trade when the trader is anticipating that the price of the cryptocurrency would rise. This is great for traders that want to make their profit but don’t have time to be monitoring the market every time. The trader can set the sell limit order and go on a vacation, knowing fully well that once the price rises to $1.61836 and above, the sell limit order would have been filled already so as to make profit.