The limit order involves specifying an exact price at which the trade has to be executed. After sending the limit order to exchange, it will appear in the order book, waiting to be accepted by another party’s market order.
In contrast to the market order, the limit order sacrifices the certainty of execution and prioritises the quality (i.e. the execution price). There’s no guarantee the market will ever reach the limit order.
To increase liquidity, exchanges, usually, charge lower fees on limit orders when compared to market orders.
The party executing a trade with a limit order is known to be a maker.