Limits/Limit Order

A limit order is an order placed with a broker to buy or sell a security at a specified price or better. A limit order is not guaranteed to execute; if the security’s market price never goes as high or low as the limit price, the order will not be filled. A limit order can only be filled if the security’s market price reaches the limit price or better. Limit orders are used to ensure that an investor does not pay more than a predetermined price for a security or sell it for less than a predetermined price.

History of Limit Orders

Limit orders have been around since the early days of stock trading. They were originally used by traders to protect themselves from large losses due to market volatility. By setting a limit order, traders could ensure that they would not pay more than a certain price for a stock or sell it for less than a certain price. This allowed traders to limit their losses in the event of a market crash.

Today, limit orders are used by both professional and retail investors to protect themselves from large losses due to market volatility. They are also used to take advantage of price discrepancies between different markets. For example, a trader may place a limit order to buy a stock at a lower price in one market and then sell it at a higher price in another market.

Comparison Table

Summary

A limit order is an order placed with a broker to buy or sell a security at a specified price or better. Limit orders are used to protect investors from large losses due to market volatility and to take advantage of price discrepancies between different markets. For more information about limit orders, investors can visit websites such as Investopedia, The Balance, and Investing.com.

See Also

• Market Order
• Stop Order
• Stop-Limit Order
• Market-if-Touched Order
• Fill-or-Kill Order
• Good-Til-Cancelled Order
• Immediate-or-Cancel Order
• All-or-None Order
• Trailing Stop Order
• One-Cancels-the-Other Order

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