A limit order is an instruction to buy or sell cryptocurrency at a specific price or better, giving you control over execution price but no guarantee the order will fill. Buy limit orders execute only at your specified price or lower, while sell limits execute at your price or higher. Limit orders prevent slippage during volatile markets and allow you to set profit targets or buy dips without watching charts constantly, though they risk missing fills if price doesn't reach your level.
Example:
Bitcoin is trading at $85,000 and you want to buy at $80,000 during the next dip. You place a limit buy order for $80,000 and walk away. Two days later, Bitcoin briefly drops to $79,500, filling your limit order at $79,500 (better than your limit). Bitcoin then bounces to $88,000, giving you an $8,500 profit per BTC. Compare to a market order: If you had panic-bought during the dip with a market order, slippage could have filled you at $81,200 due to thin liquidity during the crash, costing you $1,700 per BTC compared to your patient limit order.