Pros and cons of a limit order
Pros of a limit order
Some traders like limit orders because they can decide on the maximum price at which they want to open or close their position. If the market reaches that level, the trade will be carried out. So, limit orders enable traders to execute a trade at a certain level without having to constantly monitor the price of the asset.
With limit open orders, there is even the potential for positive slippage. If the market suddenly dips below your set amount, your position could open at an even better price.
Cons of a limit order
However, a limit order is not guaranteed to be filled, because the market price may never reach the amount that you have specified. This means that if there was a particular position that you needed to open or close, you would be at risk of it never being executed, which could impact your trading plan.
Using a limit order could also be disadvantageous if the market you are trading is very volatile. If you were using a limit entry order, and the market dropped significantly, your position would open but it would be at a loss straight away. And if you were using a limit close order, there is the risk that a sudden movement of price might prevent your order being triggered at the level at which it was set, which could impact your final profit.