Limit Order

Definition

A limit order is an instruction to buy or sell a security at a specified price or better. A buy limit order will only execute at the limit price or lower, while a sell limit order will only execute at the limit price or higher. Unlike market orders, limit orders guarantee the price but not execution — if the market never reaches your limit price, the order will not be filled. Limit orders are useful for controlling entry and exit prices, especially in volatile or illiquid markets. They can be set as day orders (expire at market close) or good-till-cancelled (GTC). Limit orders help traders avoid slippage and implement disciplined trading strategies.