Limit Order Quickstart
By DeFi Jup & Jam
Limit Order lets you buy or sell assets at a specified price, an alternative financial tool to market orders. Unlike market orders, limit orders are not executed immediately at the current market price. They execute at a specific price at which you are willing to buy or sell.
This allows you to have more control over your price instead of being at the mercy of the market.
What is Limit Order?
Limit Order is like a reliable friend, always watching out for you and acting upon your needs. Instead of monitoring market conditions and price levels then execute based on those conditions on your own, Limit Order helps you do just that.
Here’s how it works:
- You decide how much to buy or sell.
- You also decide at what price level.
- Jupiter keeps track of your order and market rates, and automatically executes your order via Jupiter Swap (with 0% slippage) when the condition of the price level is met.
It’s simple and elegant to enter positions at your desired price level or exit positions to lock in profits.
Jupiter Limit Order relies on the core mechanism of Jupiter Swap to execute your orders, which means it is different from the typical central limit orderbook (if you are familiar with traditional finance or centralized exchanges).
Key Advantages of Limit Orders
Price Control:
Limit Order only executes at your desired price level. This allows you to have complete control over when the orders execute, instead of using market orders which prices can vary.
Reduced Emotional Trading:
By planning ahead and setting predefined prices you can avoid impulse decisions based trading and stick to your plan.
When and how to use LO Effectively
When You Have a Target Price:
When you have a specific target price in mind and you are willing to wait. Limt order allows you to "set and forget" and automatically execute orders at your desired levels.
In Volatile Markets:
Instead of always monitoring price movements, Limit Order allows you to set once and let the market play out on its own, and when volatily strikes, it will automatically capitalize on the price swings.
In Low Liquidity Markets:
In markets with low liquidity, Limit Order ensures that you trade at favourable prices without suffering from price impacts and reducing loss of your potential profits.
Potential Use cases
Buying during price dips:
You can catch the tokens at lower prices without needing to time the market.
Selling to take profits:
You can take profits automatically by selling when the price hits your set target price.
Range Trading:
Limit orders can be used for range trading strategies to buy near support levels and sell near resistance levels.
Trading in Illiquid Markets:
You can avoid large spreads by placing orders and ensuring that you get a favourable price.
Long Term Investing:
Investors can utilize Limit Order to automatically accumulate assets at a target price across a longer timeframe.
How Every Investor Can Benefit from Limit Orders
For Beginners:
The core benefit for beginners is to remove emotional decision-making, which allows for better planning and discipline training. Additionally, it can help avoid overpaying or selling too cheaply.
For Experienced Traders:
Traders can benefit from automation by setting limit orders to buy/sell in fast-moving markets. They do not have to actively monitor the market. It prevents buying high or selling low during sudden market fluctuations. This can be applicable for other types of strategies too!
For Long-Term Investors:
Limit Order can used as a tool to aid accumulation or taking of profits at specific price points.
Why use Limit Order on Jupiter?
Best Prices:
Since it uses Jupiter Swap as the core execution mechanism, which means your Limit Order gets the best price aggregated across Solana DeFi. Additionally, it allows for partial fulfilment of your orders to avoid price impact in illiquid markets, ensuring you always get the best deal available.
User-Centric Design:
The simple interface works for beginners as well as experienced traders.
Efficient Execution:
Jupiter prioritizes top liquid tokens or highly traded tokens in execution, this benefits sharper and higher execution rates for your orders.