Glossary · Defined term
Limit order
A limit order is an instruction to buy or sell a stock only at a specified price or better. See how it differs from a market order, with an example.
Last updated Oct 2, 2026
What it means
A limit order is an instruction to buy or sell a stock only at a specified price or better. A buy limit executes at the limit price or lower; a sell limit executes at the limit price or higher. The advantage is price control: the investor never pays more (or accepts less) than the stated limit. The trade-off is execution risk, since the order may never fill if the market never reaches the limit price. Limit orders are commonly used in volatile or thinly traded stocks, where market orders might execute at surprising prices.
An example
For illustration, a stock trades at $52 and an investor places a buy limit order at $50. If the stock dips to $50, the order fills at $50 or better; if it never falls that far, the order simply sits unfilled. The investor got price certainty but gave up the guarantee of owning the shares.