limit order
An order to trade only at your price or better, so the price is certain but the fill is not.
A limit order is an instruction to buy or sell only at a chosen price or better. A buy limit sets the most you will pay; a sell limit sets the least you will accept.
The order may fill only if the market reaches a price that meets the limit and enough matching quantity is available. The price is controlled, but execution is not guaranteed, even if the market briefly touches the limit.
An unfilled order may remain open or expire under its stated conditions. A limit order does not ensure that a trade will happen or that its result will be favorable.
Example
Bluefin Energy shares are quoted at $31 to buy and $32 to sell. Marc places a limit order to buy 10 shares at $30.
If sellers later offer 6 shares at $30, that part can fill: 6 × $30 = $180. The remaining 4 shares stay unfilled unless enough shares become available at $30 or less. If all 10 fill at $30, the total is $300 before costs; the order will not pay $31 or $32.
Common mistakes
- Treating a touched limit price as proof that the order filled.
- Setting a limit and forgetting that the trade may never happen.
- Moving the limit impulsively just to get a fill, changing the original price constraint.
- Most people who trade lose money.
Learn it in the course
- Order types: market, limit, stop · Choose how you enter and leave: right now at any price, only at your price, or when a level breaks. See what each order does in a fast drop, with real fill prices.
- Bid, ask, spread and liquidity · Read the two prices on every screen, see why thin markets and odd hours cost more, and what a big market order does to a thin order book.