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Limit Order

In short

Buy or sell at a specific price or better — no fill if the price isn't reached

A limit order says 'buy this stock, but only if the price drops to $50 or less.' You control the price but risk not getting filled if the stock never hits your target.

Limit orders specify a maximum buy price or minimum sell price. Buy limits execute at or below the limit price; sell limits at or above. They guarantee price but not execution. Use limit orders for illiquid stocks or when the bid-ask spread is wide.

Related concepts

  • Market Order — A market order says 'buy this stock right now at whatever price it's selling for.' You get filled immediately but might pay slightly more than you expected, especially for less liquid stocks.
  • Stop Order — A stop order is your automatic exit. Set a stop at $45 on a $50 stock — if it falls to $45, your order triggers and sells at market price. It protects you from bigger losses but can fill below $45 in a fast-moving market.
  • Bid-Ask Spread — The bid is what buyers will pay; the ask is what sellers want. If the bid is $99.95 and the ask is $100.05, the spread is $0.10. Every time you trade, you pay this spread as a hidden transaction cost.
  • Time in Force — Time in force tells the broker how long to keep trying. 'Day' means cancel at market close if unfilled. 'GTC' (Good Till Cancelled) stays open indefinitely. 'IOC' (Immediate or Cancel) fills what it can right now and cancels the rest.