Glossary
Limit order
An order to buy at or below, or sell at or above, a stated price; it controls price but may not fill.
On this page
A limit order is an instruction to buy or sell only at a stated price or better. A buy limit fills at the limit price or lower; a sell limit fills at the limit price or higher. It is the main tool for controlling what you pay or receive, and the trade-off is certainty: if the market never reaches your price, the order does not execute.
How it works
A limit order that can trade immediately, because a buy limit is at or above the current ask, is called marketable and usually fills at once at the best available price within the limit. One that cannot trade yet rests in the order book until the price comes to it, it is cancelled, or it expires. Exchanges fill resting orders by price first and then by time, so earlier orders at the same price go first.
When it matters
Limit orders protect against slippage in thinly traded stocks, around the open and in fast markets, and many brokers accept only limit orders in extended-hours sessions. They do not guarantee a fill even when the price touches your limit, since orders ahead of yours may absorb the available shares. How long an order lives is set by its time-in-force, such as day or good-til-canceled.