A limit order allows users to set their desired fill price. Compared with a market order, a limit order provides greater control over the buy or sell price, but does not guarantee execution.
The main reasons why a limit order may be executed immediately are as follows:
Long order: The order price is higher than the best ask price (the lowest price at which a trader is willing to sell).
Short order: The order price is lower than the best bid price (the highest price at which a trader is willing to buy).
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1. For example, with a limit buy order at $10,207, the system will take the following actions:
The current best ask price is $10,183.
Based on price priority, the system compares the order price ($10,207) with the best ask price ($10,183) and determines that the order can be filled at the lower price of $10,183.
The order will be filled immediately on a first-come, first-served basis until the order size is reached or the price reaches $10,207.
2. For example, with a limit sell order at $10,100, the system will take the following actions:
The current best bid price is $10,182.50.
Based on price priority, the system compares the order price ($10,100) with the best bid price ($10,182.50) and determines that the order can be filled at the higher price of $10,182.50.
The order will be filled immediately on a first-come, first-served basis until the order size is reached or the price reaches $10,100.