Limit Order

A limit order puts price first. A buy limit order will only be filled at the limit price or lower. A sell limit order will only be filled at the limit price or higher.

For example, if a share is trading at 52 and you place a buy limit order at 50, your order will be filled only if the price falls to 50 or below. If you own the share and place a sell limit order at 55, it will be filled only if the price rises to 55 or more.

Limit orders give control over the price and protect against paying more or receiving less than intended, especially in volatile markets or for thinly traded securities.

The trade-off is that there is no guarantee the order will be filled. If the price never reaches the limit, the trade does not happen, and the investor might miss an opportunity. Limit orders can usually be set to expire at the end of the day or to remain active until they are filled or cancelled.