What is a limit order?

A Limit Order is an order to buy or sell a stock at or better than a specified price, know as Limit Price. A Buy Limit Order can only be executed at the Limit Price or lower, and a Sell Limit Order can only be executed at the Limit Price or higher.

Example of Limit Order:

If the stock is currently trading at $20, you place a Sell Limit Order of $21. Your order will be queued until the market price goes up to $21. If the stock did not reach $21 and then started to fall, your sell Limit Order would not be executed.

Please note that even if the stock reaches the limit price, your Limit Order may not be executed if there are orders ahead of yours at the same limit price. The orders in line ahead of you must be filled first and there may not be enough stock available to fill your order when your turn comes.