A limit order is an instruction to buy or sell only at a specified price or better, giving you price control but no guarantee it will execute.
A limit order lets you set the exact price at which you are willing to buy or sell. A buy limit executes only at or below your price; a sell limit executes only at or above it.
This gives you precise control over your entry or exit price, which is valuable in volatile markets or when trading less liquid assets where slippage is a concern.
The downside is that there is no guarantee of execution. If the market never reaches your specified price, the order simply sits unfilled, and you may miss the move entirely.
Traders use limit orders to enter positions at target prices, take profit at predetermined levels, and avoid overpaying during sudden spikes. They are the opposite of market orders, which prioritise speed over price.
An asset trades at $105 but you only want to buy at $100. You set a buy limit order at $100; it stays unfilled until the price dips to $100 or below, then executes. If the price never falls that far and instead rallies, your order simply never fills and you miss the move.
No. A limit order only fills if the market reaches your specified price or better. If the price never gets there, the order sits open and may expire unfilled, which means you could miss the trade entirely.
Use a limit order when controlling your price matters more than speed, such as in volatile or thinly traded markets where slippage is a risk, or when you want to buy or sell only at a specific target level.
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