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How do Limit Orders Fill?

Limit orders are one of the three types of orders that you can place on Phemex.com.

What are Limit orders?

Limit orders specify the maximum or minimum price that you are willing to buy or sell at. This order type helps minimize trading costs. However, limit orders do not guarantee execution. There is a chance that your order may not be executed if it is placed far out of the market. So how does the limit order work?

How does the Limit Order work?

For a long/buy order, if the order price is equal or greater than the best ask price, the order will be filled immediately. The executed price will be the best ask price. If the order price is lower than the best ask price, the order will be added to the order book where it will wait to be filled. When the best ask price drops to the limit order’s price, it will then be filled.
For a short/sell order, if the order price is equal to or lower than the best bid price, the order will be filled immediately. The executed price will be the best bid price. If the order price is greater than the best bid price, the order will be added to the order book where it will wait to be filled. When the best bid price increases to the limit order’s price, it will then be filled.
To help clarify how the limit order fills, we will use our BTCUSD order book as an example. We can tell from the order book that the best ask price (Sell) is 11703.0, the best bid price (Buy) is 11702.5.

For a long/buy order:

For example, if you price your order at 11701, it will be added to the order book where it will wait to be filled. If you price your order at 11707, the limit order will be filled immediately and be executed at the best ask price (11703).

For a short/sell order:

If you price your order at 11704, it will be added to the order book where it will wait to be filled. If you price your order at 11700, the limit order will be filled immediately and be executed at the best bid price (11702.5).

Special cases of how a limit order filled

The executed price is also related to the size of the order. To help clarify how the order size can affect the executed price, we will use the same BTCUSD order book for this example.

For a long/buy order:

If your limit order price is at 11703 and the order size is 40,000, then a part of the order (size 33,125) will be filled at 11703.0 and the remainder (size 6,875) will be added to the order book and wait to be filled.
If your limit order price is 11704 and the order size is 260,000, part of the order (size 33,125) will be filled at 11703, another part (size 190,648) will be filled at 11703.5, another portion of the order (size 35,640) will be filled at 11704, and the rest (size 587) will be added to the order book and wait to be filled.

For short/sell order:

For example, if your limit order price is at 11702.5 and the order size is 500,000, part of the order (size 427,677) will be filled at 11702.5, and the rest (size 72,323) will be added to the order book and wait to be filled.
If your limit order price is 11702 and the order size is 960,000, part of the order (size 427,677) will be filled at 11702.5, another part of the order (size 528,396) will be filled at 11702, and the rest (size 3,927) will be added to the order book and wait to be filled

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