Adjust the Limit Order Price

When placing an order at a Bitcoin exchange the default order type will typically be a limit order. In this order type, orders will only be filled while the price is better than (or matches) the set limit price. When choosing this oder type, most exchanges will also set the limit price equal to the best bid or best ask depending on whether the user is selling or buying. As shown below, bid/ask sizes can be weak. The buy order automatically gets a limit price of $269.69 equal to the best (lowest) ask, but there are only 2.437 Bitcoins being sold at this rate.

Limit Order

For a buy order of 4 Bitcoins this means that 1.563 cannot be executed right away, and depending on the price movements the order might not be completely executed at all. The order book also shows that this could be avoided by setting the limit price just 1 cent higher, as another 2.4 Bitcoins is sold at this price level. By slightly adjusting the default limit order price, it is possible to avoid incomplete orders without forfeiting their protection.

Take a second to support Digiconomist on Patreon!
Become a patron at Patreon!

Comments (5)

  1. Christopher Barbara September 28, 2021
  2. Bracket james February 17, 2022
  3. Jennifer Hubbard March 24, 2022
  4. Rita orlowski May 9, 2022
  5. Rita orlowski May 9, 2022