Differences between Kraken market orders and limit orders and usage scenarios

On Kraken, market orders execute trades instantly at current prices, ideal for volatile markets, while limit orders allow setting specific prices, useful for targeted trading.

Jun 01, 2025 at 08:21 pm

When trading on the Kraken cryptocurrency exchange, understanding the differences between market orders and limit orders is crucial for effective trading. Market orders and limit orders serve different purposes and are used in various scenarios depending on a trader's strategy and market conditions. This article will delve into the specifics of each type of order, their differences, and the scenarios in which they are most effectively used.

What is a Market Order?

A market order is an order to buy or sell a cryptocurrency at the best available current price. When you place a market order, you are essentially telling the exchange to execute your trade immediately at the prevailing market rate. This type of order is used when speed of execution is more important than the price at which the trade is executed.

Market orders are particularly useful in highly volatile markets where prices can change rapidly. For instance, if you believe the price of a cryptocurrency is about to surge or plummet and you want to enter or exit the market quickly, a market order would be the best choice. However, the downside of market orders is that you have no control over the exact price at which your order will be filled, which can sometimes lead to slippage.

What is a Limit Order?

On the other hand, a limit order allows you to specify the price at which you are willing to buy or sell a cryptocurrency. Unlike a market order, a limit order will only be executed if the market reaches the price you have set. This type of order is used when you want to have more control over the price at which your trade is executed.

Limit orders are particularly useful for traders who have a specific price target in mind. For example, if you believe that a cryptocurrency is undervalued and you want to buy it at a certain price, you can set a limit order to buy at that price. If the market never reaches your specified price, the order will not be executed, thus protecting you from buying at a higher price than you intended.

Key Differences Between Market and Limit Orders

The primary difference between market orders and limit orders lies in the control over the execution price. With a market order, you have no control over the price at which your order is filled, whereas with a limit order, you can set a specific price at which you are willing to trade.

Another key difference is the speed of execution. Market orders are typically executed instantly, whereas limit orders may not be executed at all if the market does not reach the specified price. This makes market orders more suitable for traders who prioritize speed, while limit orders are better for those who prioritize price control.

Scenarios for Using Market Orders

Market orders are best used in the following scenarios:

• High Volatility: When the market is highly volatile, and you need to enter or exit a position quickly. For example, if you see a sudden price drop and want to buy a cryptocurrency before it potentially rebounds, a market order ensures you get into the market immediately.

• Liquidity: When trading a highly liquid cryptocurrency where the spread between the bid and ask prices is narrow. In such cases, the risk of slippage is minimal, making market orders a viable option.

• Urgent Trades: If you need to execute a trade urgently and are willing to accept the current market price, a market order is the fastest way to do so.

Scenarios for Using Limit Orders

Limit orders are best used in the following scenarios:

• Price Targets: When you have a specific price target in mind and are willing to wait for the market to reach that price. For example, if you want to buy Bitcoin at $30,000, you can set a limit order to buy at that price and wait for the market to reach it.

• Risk Management: When you want to manage your risk by setting a maximum buy price or a minimum sell price. This can help you avoid buying at a higher price or selling at a lower price than you intended.

• Low Liquidity: When trading a cryptocurrency with low liquidity, where the spread between the bid and ask prices is wide. In such cases, using a limit order can help you avoid significant slippage.

How to Place a Market Order on Kraken

To place a market order on Kraken, follow these steps:

• Log in to your Kraken account: Ensure you are logged into your Kraken account.
• Navigate to the trading page: Go to the trading page for the cryptocurrency pair you want to trade.
• Select 'Market': On the order form, select 'Market' as the order type.
• Enter the amount: Enter the amount of cryptocurrency you want to buy or sell.
• Review and submit: Review your order details and submit the order. The order will be executed at the best available price.

How to Place a Limit Order on Kraken

To place a limit order on Kraken, follow these steps:

• Log in to your Kraken account: Ensure you are logged into your Kraken account.
• Navigate to the trading page: Go to the trading page for the cryptocurrency pair you want to trade.
• Select 'Limit': On the order form, select 'Limit' as the order type.
• Enter the price: Enter the price at which you want to buy or sell the cryptocurrency.
• Enter the amount: Enter the amount of cryptocurrency you want to buy or sell.
• Review and submit: Review your order details and submit the order. The order will be executed only if the market reaches your specified price.

Frequently Asked Questions

Q: Can I cancel a market order after it has been placed on Kraken?

A: No, once a market order is placed and executed on Kraken, it cannot be canceled. Market orders are designed to be executed immediately at the best available price, so once the order is filled, it is considered complete.

Q: What happens if my limit order is not filled on Kraken?

A: If your limit order is not filled on Kraken, it will remain open until it is either filled or canceled by you. You can check the status of your limit orders in the 'Open Orders' section of your Kraken account.

Q: Are there any fees associated with market and limit orders on Kraken?

A: Yes, Kraken charges fees for both market and limit orders. The fees vary depending on the trading pair and the volume of your trade. You can find the fee schedule on Kraken's website under the 'Fees' section.

Q: Can I use stop orders on Kraken?

A: Yes, Kraken also supports stop orders, which are a type of order that becomes a market order once a specified price is reached. Stop orders can be useful for setting stop-loss levels to manage risk.