How Do Limit Orders Attempt to Control Slippage on Public Exchanges?
A Limit Order is an instruction to buy or sell an asset at a specific price or better. By setting a price limit, the trader ensures that their order will only be executed if the market reaches their desired price.
This prevents execution at significantly worse prices, thereby effectively eliminating negative slippage. However, the risk is that the order may not be filled at all if the market moves away from the limit price.
Glossar
Limit Orders
Execution ⎊ Limit orders, within cryptocurrency, options, and derivatives markets, represent instructions to buy or sell an asset at a specified price, or better, contingent upon market conditions.
Control
Mechanism ⎊ Control, within cryptocurrency, options, and derivatives, represents the capacity to influence price discovery and execution, often through order flow management and market-making activities.