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Limit Order

A limit order can only be executed at your specific limit price or better. Investors often use limit orders to have more control over execution prices.

Keep in mind, limit orders aren't guaranteed to execute. There has to be a buyer and seller on both sides of the trade. If there aren't enough shares in the market at your limit price, it may take multiple trades to fill the entire order, or the order may not be filled at all.

Buy Limit Order

With a buy limit order, a stock is purchased at your limit price or lower. Your limit price should be the maximum price you want to pay per share.

Example

MEOW is currently trading at $10 per share, but you only want to pay $8 per share at most. You would set your limit price to $8.

  • If MEOW drops from $10 to $8 or lower, and there are shares available, your order should fill (in full or partially) at $8 or lower.
  • If MEOW doesn’t drop to $8, your order won’t execute.

These examples are shown for illustrative purposes only. In general, understanding order types can help you manage risk and execution speed. However, you can never eliminate market and investment risks entirely. It’s usually best to choose an order type based on your investment goals and objectives.

Sell Limit Order

With a sell limit order, a stock is sold at your limit price or higher. Your limit price should be the minimum price you want to receive per share.

Example

MEOW is currently trading at $10 per share, but you want to receive at least $12 per share. You would set your limit price to $12.

  • If MEOW rises from $10 to $12 or higher, and there are buyers available, your order should be filled (partially or fully) at your limit price or higher.
  • If MEOW doesn’t rise to $12, your order won’t execute, and you’ll keep your shares.

These examples are shown for illustrative purposes only. In general, understanding order types can help you manage risk and execution speed. However, you can never eliminate market and investment risks entirely. It’s usually best to choose an order type based on your investment goals and objectives.

Note

Limit orders that are considered to be aggressively high or low may be rejected due to the increased likelihood of them not being able to execute. Learn more by checking out our Help Center article on order rejections.

Reference No. 20210306-1552909-4663789
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