Market and Limit Orders

Market: Buy (or sell) at the best average market price.

Limit: Buy (or sell) at a fixed price (or better).

The advantage of limit orders over market orders is that they can ensure a better average fill price, since the bids or asks used to fill the order will be at the limit (or better). The disadvantage is that there's no guarantee the order will completely fill (or fill at all) - it may not be the case that adequate bids or asks to fill the order will appear on the market.

Examples: If the lowest current ask for XBT/USD is $96, but you think you can get your buy order filled a bit lower, you might put in a limit buy order at $94. You can also use market and limit orders to create short positions. For example, if the highest current bid for XBT/USD is $95, and you want to open a short position at $110, this can be done by placing a limit sell order at $110. This order will start to fill at $110 (or better) once bids at $110 (or higher) appear in the order book. For any short position, you are borrowing in order to open the position, so leverage must be used.