Limit Order
A limit order is an instruction to buy or sell a stock at a specific price or better.
Quick Reference:
Sets maximum price you’ll pay. Sets minimum price you’ll accept. More control over price.
Order may not be filled Avoid overpaying or underselling
Expanded explanation:
When you place a limit order, you tell your broker the price you are willing to buy or sell at. For example, if a stock trades at $10 but you only want to buy if it drops to $9, you place a buy limit order at $9. If the stock falls to that price, the order executes. Similarly, a sell limit order ensures you don’t sell below your chosen level.
The benefit of limit orders is control. The risk is that the market may never reach your price, leaving the order unfilled. Beginners often use limit orders to avoid suprises, particularly with less liquid stocks where prices can move quickly.