A limit order is a trade order that lets you specify a price at which the buy or sell order could get executed. When the price of a particular asset reaches the level set in the limit order, the buy or sell trade occurs automatically, letting you buy or sell at pre-set levels.
In such an instance, your limit order is not executed until the price of the financial instrument reaches the specified level. Limit orders are highly effective when trading cryptocurrencies as they can help you manage the market's volatility and minimize potential losses.
A buy limit order specifies a maximum price you have set at which you are willing to buy the crypto you are interested in. A sell limit order lets you sell your cryptos at the limit price specified or anything higher than that level.
Limit orders are an excellent option for HODLers who want to buy cryptocurrencies at the lowest possible price and are willing to wait for such levels to be reached. However, limit orders can be risky if the markets move in the opposite direction, causing you to miss out on exciting trade opportunities.