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Limit order

An order to buy at or below, or sell at or above, a price you set; it may never fill.

Market, limit and stop ordersA price track crossing a resting limit order below the market and a stop order above it.10410210098PriceTime (the market moves left to right)priceSTOP BUY at 103.00waits above the market; becomes a market order when touchedtriggers hereMARKET ORDERfills at once at 100.60filled hereLIMIT BUY at 98.50rests below; fills only at 98.50 or better
Market, limit and stop orders. A market order buys straight away at whatever price is there. A limit order waits below until the price comes to it, and a stop order sits above and turns into a market order the moment price touches it.

A limit order rests in the order-book until price reaches your level. It guarantees the price but not the fill. If the market never trades at your limit, you simply do not get in or out.

Limits are how you avoid slippage and how you can capture the bid-ask-spread instead of paying it. The cost is that fast moves can leave you behind.

Example: the stock is $20.05. You place a limit buy at $20.00. If it dips to $20.00 and there is enough size ahead of you, you fill; if it bounces at $20.01 and runs, you miss the trade.

Related: market-order, fill, order-book, good-till-cancelled

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