What Is a Limit Order?
A limit order sets the worst price you'll accept. When buying, it's the most you'll pay; when selling, it's the least you'll take. The order rests until the market reaches your price, then fills at that price or better.
The One-Sentence Version
A limit order trades execution certainty for price certainty. You control the price you get; you give up the guarantee of getting filled at all.
Buy Limits vs Sell Limits
Buy Limit
- Set the maximum price you'll pay
- Fills at your limit or lower
- Usually sits below the current price, waiting
Sell Limit
- Set the minimum price you'll accept
- Fills at your limit or higher
- Usually sits above the current price, waiting
Follow One Limit Order
A stock is trading at $50.10. You place a buy limit at $50.00 for 100 shares. Nothing happens yet, the market is above your price.
Later the price dips to $50.00 and your order fills at $50.00 (or better). If the price never dips that low, your order simply never fills, you don't own the stock, but you also never overpaid.
The Catch: It Might Not Fill
Price control has a cost: your order only executes if the market reaches your limit. Set a buy limit too low and you may watch the stock rise without you. You can also get a partial fill — some shares now, the rest still waiting — if there aren't enough shares available at your limit price.
The Trade You Didn't Make
A limit order can protect you from overpaying, and also leave you on the sidelines. If a stock runs higher and your limit never triggers, the 'cost' is the trade you missed. There's no universally right answer; it depends on whether price or certainty matters more for that particular order.
A Useful Trick: The Marketable Limit Order
You can set a buy limit slightly above the current ask (or a sell limit slightly below the bid). It usually fills right away like a market order, but your limit caps how far the price can run against you. This is a marketable limit order — speed with a safety ceiling.
Follow One Marketable Limit
A stock is quoted bid $50.08 / ask $50.10. You want in, but you don't want to pay more than $50.15 if the price suddenly jumps. You place a buy limit at $50.15.
Because your limit is *above* the current ask, the order is marketable, it fills immediately at $50.10 (or better, if a price-improvement opportunity exists). If the ask had suddenly spiked to $50.30, your order would simply not fill, because $50.30 is above your $50.15 ceiling. You get the speed of a market order with a built-in cap on price surprise.
Limit Orders at a Glance
| Feature | Limit order |
|---|---|
| Speed | Slower — waits for your price |
| Price control | Full — fills at your price or better |
| Will it fill? | Only if the market reaches your price |
| Main risk | Missing the trade entirely |
A limit order at a glance, the mirror image of a market order.
Educational use only
For learning, not advice. StockCram is independent of any brokerage referenced here.