Limit Order Mechanics

Limit order mechanics define the process by which a trader specifies the maximum price they are willing to pay or the minimum price they are willing to receive for an asset. Unlike market orders, limit orders are placed into the order book and only execute when the market price reaches the specified level.

This provides traders with control over execution price, protecting them from unexpected slippage during volatile periods. The order remains active until it is filled or cancelled by the trader.

In professional trading, understanding the priority rules of the order book, such as price-time priority, is essential for optimizing order placement. Limit orders are a fundamental tool for managing trade safety and reducing costs in liquid markets.