Limit Order

Definition

Limit Order in plain English

A limit order is you telling the market your price limit and refusing to budge past it: "buy only if it's $50 or cheaper" or "sell only if it's $50 or more." The tradeoff is control versus certainty — you're guaranteed not to get a worse price than you set, but if the market never reaches your price, your order just sits there unfilled. It's like leaving a note at a garage sale saying "I'll pay up to $20 for that lamp" — you won't overpay, but you also might go home empty-handed if nobody accepts.

Learn these first

• Spoofing
• Tick Size

Related Market Microstructure terms

• Access Rule (Rule 610)
• Call Auction
• Continuous Auction
• Iceberg Order
• Limit Order Book (LOB)
• Maker-Taker Fee Model
• Order Protection Rule (Rule 611)
• Order-Driven Market
• Price Priority
• Price-Time Priority