Limit Order
A limit order sets the worst price you will accept. It can reduce costs but may not fill.
Definition
A limit order sets a maximum buy price or minimum sell price. It can rest in the order book and may add liquidity instead of removing it.
Why it matters
Limit orders can reduce execution costs by avoiding unnecessary spread crossing. They can improve effective spread and help you control execution risk, but they introduce fill risk.
Common pitfalls
Assuming fill: A good price is useless if it never executes.
Chasing price: Constantly moving a limit order can turn into paying taker costs anyway.