Fix vs. Limit

Attribute	Fix	Limit
Definition	Set value that cannot be exceeded	Maximum value that cannot be exceeded
Flexibility	Less flexible	More flexible
Usage	Common in financial markets	Common in technology and manufacturing
Application	Used in trading to execute orders at a specific price	Used in production to control output levels

Introduction

When it comes to trading in the financial markets, there are various types of orders that traders can use to execute their trades. Two common types of orders are Fix and Limit orders. Both Fix and Limit orders have their own unique attributes and are used by traders for different purposes. In this article, we will compare the attributes of Fix and Limit orders to help traders understand when to use each type of order.

Definition of Fix and Limit Orders

Fix orders are orders that are executed at the current market price. This means that the trader is willing to buy or sell the asset at the price that is currently available in the market. On the other hand, Limit orders are orders that are executed at a specific price set by the trader. The trader specifies the price at which they are willing to buy or sell the asset, and the order will only be executed if the market price reaches that specified level.

Execution

One of the key differences between Fix and Limit orders is how they are executed. Fix orders are executed immediately at the current market price. This means that there is no guarantee that the trader will get the exact price they see when they place the order. On the other hand, Limit orders are only executed when the market price reaches the specified price set by the trader. This gives the trader more control over the price at which their order is executed.

Price

Another important difference between Fix and Limit orders is the price at which the orders are executed. Fix orders are executed at the current market price, which means that the trader may end up paying a slightly different price than what they see when they place the order. This can result in slippage, where the actual execution price is different from the expected price. On the other hand, Limit orders are executed at the specified price set by the trader, which helps to eliminate slippage and ensures that the trader gets the price they want.

Risk Management

Fix and Limit orders also differ in terms of risk management. Fix orders do not provide any protection against adverse price movements, as the order is executed immediately at the current market price. This means that the trader is exposed to the risk of price fluctuations between the time the order is placed and the time it is executed. On the other hand, Limit orders provide a level of protection against adverse price movements, as the order will only be executed at the specified price set by the trader.

Flexibility

When it comes to flexibility, Fix and Limit orders offer different advantages. Fix orders are more flexible in terms of execution, as they are executed immediately at the current market price. This can be advantageous in fast-moving markets where speed is crucial. On the other hand, Limit orders offer more flexibility in terms of price, as the trader can specify the exact price at which they want their order to be executed. This can be useful for traders who have a specific target price in mind.

Conclusion

In conclusion, Fix and Limit orders have their own unique attributes that make them suitable for different trading scenarios. Fix orders are executed at the current market price and offer speed of execution, while Limit orders are executed at a specified price set by the trader and offer more control over the execution price. Traders should consider their trading goals and risk tolerance when deciding whether to use Fix or Limit orders in their trading strategies.