Market Order vs. Limit Order: What's the Difference and Which Is Best for Arbitrage?

Limit Orders vs. Market Orders in Crypto Arbitrage: Which Should You Use?

Estimated Reading Time: 5 Minutes

In crypto arbitrage trading, every second and every satoshi counts. While price differences between exchanges offer profitable windows, the way you execute those trades—specifically whether you use limit orders or market orders—can make or break your returns. Choosing the right order type is a skill every arbitrageur must master, especially in a fast-moving, high-volatility environment.

This guide breaks down the difference between limit and market orders, shows how they apply to real-world arbitrage strategies, and offers insights into when each order type works best—depending on liquidity, spread, and timing. If you’re serious about crypto arbitrage, understanding this is just as critical as spotting the price gap itself.

What Is a Limit Order in Crypto Trading?

A limit order lets you buy or sell a cryptocurrency at a specific price—or better. Unlike market orders, which are executed immediately, a limit order sits on the exchange’s order book until your desired price is reached.

Say you want to buy Solana (SOL) but only if it hits $170. You’d place a limit buy order at $170. If the price never dips to that level, your order won't be filled. Similarly, if you want to sell SOL at $180, your limit sell order waits until the price reaches or exceeds that level.

Why limit orders matter for arbitrage:
In arbitrage, you’re often trying to buy low on one exchange and sell high on another. A limit order helps ensure you actually buy at the low price you're targeting—without chasing the price up due to market movement or thin order books.

What Is a Market Order in Crypto?

A market order tells the exchange to buy or sell a cryptocurrency immediately at the best available price. It's the fastest way to enter or exit a trade, but it doesn’t guarantee the exact price—just the fastest execution.

For example, if you're trying to buy 2 ETH with a market order, the exchange will fill it at the lowest available ask prices on the order book. If liquidity is shallow or the market is volatile, you could end up paying more than expected. This difference is known as slippage.

Why market orders matter for arbitrage:
Sometimes, timing is everything. If you’re moving fast to capture a shrinking price gap between two exchanges, a market order can help you lock in the trade before the opportunity disappears.

Limit Orders vs. Market Orders: Key Differences That Matter in Arbitrage

FeatureLimit OrdersMarket OrdersSpeed | Slower, may not fill | Instant execution
Price Control | High | Low
Slippage Risk | Minimal | Higher
Execution Guarantee | Not guaranteed | Guaranteed
Best For | Illiquid or volatile markets | High-liquidity, time-sensitive trades

In short: limit orders give you control over price but may delay execution or miss the trade entirely. Market orders are quick but can lead to unexpected losses if the order book is shallow.

When to Use Limit Orders in Crypto Arbitrage

Limit orders are ideal in low-to-medium liquidity markets, where using a market order might move the price against you. For instance, imagine you're buying a lesser-known altcoin like JasmyCoin, and you see a price difference between Exchange A and Exchange B. A limit order ensures you only buy if the price remains where it looks profitable—not after it's already moved due to your trade size or other buyers.

Limit orders are also a smart move when:

• You're dealing with wider bid-ask spreads.
• You have time to wait for the market to come to you.
• You want to avoid slippage on the buying side of an arbitrage pair.

Pro tip: Arbified, a real-time crypto arbitrage tracking platform, shows liquidity scores and bid-ask spreads for each trade setup—so you know whether a limit order is safer before you commit.

When to Use Market Orders in Crypto Arbitrage

Market orders are best used when the trade must happen right now—especially if you're dealing with a coin like Bitcoin, Ethereum, or other high-cap tokens where order books are deep.

Let’s say Arbified shows an arbitrage opportunity where ETH is trading at $3,500 on Exchange A and $3,520 on Exchange B. If both platforms have high liquidity and low spreads, a market order allows you to instantly capture the $20 per coin profit—before it vanishes.

Use market orders when:

• The coin has high liquidity and a tight spread.
• The arbitrage window is time-sensitive.
• You're confident the order book can absorb your trade size without significant slippage.

Combining Limit and Market Orders: A Smart Arbitrage Strategy

Advanced traders often use both order types in a single arbitrage cycle. For example:

1. Use a limit order to buy on the cheaper exchange (especially if it's illiquid).
2. Use a market order to sell quickly on the more liquid, higher-priced exchange.

Let’s say you’re trading Avalanche (AVAX). It’s priced at $38.20 on Exchange A and $38.60 on Exchange B. You set a limit buy at $38.20 to avoid slippage, and once filled, you use a market order to sell at $38.60 on the other exchange. If Exchange B has strong order book depth, your market order executes quickly, locking in profit with minimal friction.

This hybrid approach helps you balance price control with execution speed, especially when liquidity conditions differ between exchanges.

Real-World Example: Order Types in Action

Imagine a trade involving Litecoin (LTC):

• Exchange A: LTC is priced at $102.00, but the order book is thin.
• Exchange B: LTC is trading at $102.80 with high liquidity.

You decide to:

• Place a limit buy order at $102.00 on Exchange A to avoid driving the price up.
• As soon as it fills, execute a market sell on Exchange B to capture the $0.80 profit.

Had you used a market order on Exchange A, your buying price might have jumped to $102.20—shrinking your profit or eliminating it entirely.

How Arbified Helps You Choose the Right Order Type

Arbified simplifies arbitrage decision-making by showing key metrics like:

• Liquidity scores
• Bid-ask spreads
• Execution feasibility
• Exchange withdrawal times

With this data in front of you, it's easier to choose whether a limit order or market order will help you make the most of a trade—without stepping into hidden risks like slippage, failed orders, or delays.