What Is a Limit Order?
A limit order instructs your broker to buy or sell a security only at a specified price or better. A buy limit executes at or below your price; a sell limit at or above. Execution is not guaranteed — if the market never reaches your price, the order may not fill.
How a Limit Order Works
When you place a limit order, you tell your broker the maximum price you are willing to pay (for a buy) or the minimum price you are willing to accept (for a sell). Your order sits in the exchange's order book and waits until a matching counter-party is available at your specified price or better. A buy limit order for $50 means your broker will only execute the trade at $50 or lower. A sell limit order at $75 means the trade only executes at $75 or higher.
Limit orders are the preferred tool for traders who care more about price than about certainty of execution. They are especially valuable when trading securities with wide bid-ask spreads, low average daily volume, or during volatile market conditions — situations where submitting a market order could result in a significantly worse fill. Day traders frequently use limit orders placed just inside the bid or ask to get filled at competitive prices while controlling their entry cost.
The key tradeoff to understand is that price control comes at the cost of execution certainty. If a stock is trading at $52 and you place a buy limit at $50, you may never get filled if the stock continues higher. In rapidly moving markets, a limit order can cause you to miss a trade entirely. Additionally, a limit order can be partially filled — you might order 500 shares but receive only 200 if that is all that was available at your limit price, with the remainder sitting open until canceled or expired.
Key Points
- A buy limit order fills at or below your specified price; a sell limit order fills at or above your specified price.
- Limit orders give you price control but do not guarantee execution — the market must reach your price for the order to fill.
- Most limit orders default to "day" time-in-force and cancel automatically at market close if unfilled; "good-till-canceled" orders persist across sessions.
- Limit orders can be partially filled — you may receive fewer shares than requested if limited supply exists at your price.
Learn More
Limit orders are one of the fundamental building blocks of trading — but there are several more order types that combine price control with trigger conditions. See Stock Order Types Explained for a complete guide to market, limit, stop, stop-limit, and trailing stop orders.
Related: What Is a Market Order? · Trading Glossary
Related Questions
What is a market order? A market order instructs your broker to execute a buy or sell immediately at the best available price, regardless of what that price is. It guarantees execution but not the fill price. Market orders are best used for highly liquid securities during normal trading hours when slippage is minimal.
What happens if my limit order doesn't fill? If the security's market price never reaches your limit price before the order expires, the order is canceled without executing — you don't own any shares and no money changes hands. Day orders expire at the close of the trading session. If you need the order to persist, set it to good-till-canceled (GTC), which typically remains active for 60–90 days depending on your broker.