Limit Order
An order to buy or sell a cryptocurrency at a specific price or better. A buy limit order executes at the limit price or lower, while a sell limit order executes at the limit price or higher. Limit orders provide price control but may not execute if the market never reaches the specified price.
“If Bitcoin is trading at $62,000 and you place a buy limit order at $60,000, your order will only execute if the price drops to $60,000 or below.”
Market Order
An order to buy or sell a cryptocurrency immediately at the best available current price. Market orders guarantee execution but not a specific price. In low-liquidity markets, large market orders can cause significant slippage as they consume multiple price levels in the order book.
Order Book
A real-time list of all open buy orders (bids) and sell orders (asks) for a trading pair on an exchange, organized by price level. The order book shows market depth and the spread between the highest bid and lowest ask. Centralized exchanges and some DEXs use order books to match buyers with sellers.
Trading
The buying and selling of cryptocurrencies with the goal of generating profit from price movements. Crypto trading occurs on centralized exchanges (using order books), decentralized exchanges (using liquidity pools), and via derivatives platforms. Common strategies include spot trading (buying/selling actual assets), margin trading (using leverage), and derivatives trading (futures, perpetuals, options).