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Limit Order

A limit order refers to an order type where the buying or selling of an asset takes place at a specified price. For buy limit orders, it is only executed when the price is lower or equal to the limit price. Similarly, the price can be equal to or exceed the limit price threshold for sell limit orders.

The limit order guarantees the investor gets an asset at their desired price point. It has its own shortcomings as well. In case the asset doesn’t reach the limit price, the order is never executed in the first place. Investors can significantly lose on investment opportunities.

With limit orders, the trader gains more control over the price, safeguarding them from a volatile market. For limit sell orders, the traders are also guaranteed a specified return.

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