Limit Order

Limit Order - Definition

A limit order is an instruction to your brokerage firm to buy or sell a security at a set price. Unlike other orders which can trigger execution at market, a limit order requires that your specific price is hit in order to execute the trade. The only caveat to a limit order is that your price may never be touched, thus you will never be able to enter or exit the position. Limit orders are viewed as more of a defensive trading strategy for entering and exiting positions. Traders with more experience or who need fast execution will want to execute orders at market. Market and limit orders are the two most widely used forms of order execution in the trading marketplace.