Trading
Limit Order
A limit order sets a boundary: a buy limit will only fill at or below your chosen price, and a sell limit only at or above it. This protects against paying too much or selling too cheap.
The cost of that control is that the order may never fill if the market does not reach your price. It trades certainty of execution for certainty of price, the opposite tradeoff from a market order.
Limit orders are favored by patient traders and by anyone dealing in less liquid securities where a market order could suffer meaningful slippage.
Example
Placing a buy limit order at $48 means you will only purchase the stock if it drops to $48 or lower.
Limit Order — FAQ
What is Limit Order?
A limit order is an instruction to buy or sell a security only at a specified price or better, giving the trader control over price at the cost of guaranteed execution.
Can you give an example of Limit Order?
Placing a buy limit order at $48 means you will only purchase the stock if it drops to $48 or lower.
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