Limit Order

A limit order gives you control over price. A buy limit order will only be filled at your limit price or lower. A sell limit order will only be filled at your limit price or higher. The trade-off is that your order might never be filled if the market does not reach your price.

Limit orders are useful when you care more about the price than about speed, for example with thinly traded stocks that have wide bid-ask spreads, or when trading in pre-market and after-hours sessions, where many brokers accept only limit orders.

An unfilled limit order waits in the market until it is executed, canceled, or expires. Most brokers let you choose how long it stays active, such as for the day only or good-til-canceled. A limit order can also be partially filled if only some shares are available at your price.

Example: a stock trades at $52. You place a buy limit order at $50. If the price falls to $50 or below and a seller is available, your order is filled at $50 or better. If the price never drops that far, you do not buy.