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What is a Limit Order?

A Limit Order is a type of order to buy or sell a security, where the trader wants to set a specific price for the trade, or any price that’s better than the price set.

From a buy and sell standpoint, a buy limit order would be designed to have the trade executed at the designated price, or any price lower than that. A sell order is just the opposite, where the trader hopes to execute the trade at a minimum set price. Limit orders typically have a period of time before they are canceled, if the designated price is not reached by a certain period.

Limit orders are especially useful for trading in low-volume or highly volatile stocks, as in both cases a trader can generally set the limit order with less risk. Since limit orders take a little finesse and some watching, they may incur a larger commission to execute.

What is a Stop Limit Order?
What is Stop-Loss Order?

Keywords: stocks, securities, trading, limit order,