Limit Order

A buy or sell order placed in a financial market that is programmed to execute at a specific price point and for a specific lot size. Typically, a buy limit order is placed at a price below the lowest ask price, and a sell limit order is place above the highest bid price. Limit orders allow for greater control over price execution and the ability to place an order in advance, but there are no guarantees of execution of the price doesn’t rise or fall to the limit price. An “all-or-nothing” limit order means the order only executes if a matching order meets the indicated lot size. Some traders also use stop-loss limit orders to minimize downside risk on a bad trade.