Why was my limit order not executed?
Last updated
Last updated
Understanding what a limit order is:
A limit order is an order you place to buy or sell something at a specific price. The order will only be executed when the market price reaches the price you set. You can use a limit order to buy when the price is lower than the current market price or sell when the price is higher than the current market price. If the market price does not reach the price you set in the limit order, the order will not be executed.
In contract trading, the market price is also called the "on-exchange price" or "last price." If your buy limit order price is higher than the current market price, the system will execute the order at the current market price, allowing you to buy at a lower price. Similarly, if your sell limit order price is lower than the current market price, the system will execute the order at the current market price, allowing you to sell at a higher price. This can help you make more profit.
Why wasn’t my limit order executed even though the latest price reached it?
In contract trading, the latest price is also known as the "on-exchange price" or "market price." The latest price is the price at which a buyer and seller agree to trade. When the transaction occurs, the latest price is updated.
If your set price is equal to the latest price, but there is no one else willing to trade with you at that price, your limit order will still not be executed. This is because of market liquidity, which refers to whether there are enough buyers and sellers willing to trade at the price you set. The higher the liquidity, the more likely the trade is to be executed.
Popular assets like Bitcoin and Ethereum usually have good liquidity because many people trade them, making it easy for buyers and sellers to match. However, during extreme market conditions, liquidity may be insufficient, causing your limit order to remain unexecuted. For example, if Ethereum drops sharply from 3800 to 3400, and you set a buy limit order at 3400, but there aren't enough sellers willing to sell at this price, your limit order might not be filled.
To better understand, let's look at an example:
Suppose you hear that the price of apples has plummeted, and your neighbor just bought an apple for one dollar (the latest price). You rush to the market and place a limit order to buy apples at one dollar. However, at that moment, there are no sellers willing to sell apples at one dollar, or they are waiting and unwilling to sell (insufficient liquidity, no counterpart), so you are unable to buy any apples (your limit order remains unexecuted). Even though your neighbor just bought an apple at one dollar (the latest price matches your limit order price), your order for one dollar won't be executed.
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