What Is a “Limit Order” and How Does It Mitigate Execution Risk from Fee Spikes?
A limit order is an instruction to buy or sell a security at a specified price or better. It allows a trader to control the price they execute at, mitigating the risk of poor execution due to market volatility.
While it does not directly control the network fee, a trader can wait for the fee spike to subside before submitting the order, or use a lower fee bid, accepting a delay in execution but ensuring the trade is profitable at the desired price.
Glossar
Automated Market Maker
Architecture ⎊ Automated Market Makers (AMMs) represent a paradigm shift in decentralized exchange (DEX) design, moving away from traditional order book models to a constant function market mechanism.
Limit Order
Instrument ⎊ A limit order is an instruction to trade an asset at a specified price or better, providing the trader with precise control over the entry or exit cost, unlike a market order.