A limit order is a type of order that allows you to specify a maximum price at which you are willing to buy or a minimum price at which you are willing to sell a security. When you place a limit order, you are essentially setting a "ceiling" for the highest price you are willing to pay (in the case of a buy order) or a "floor" for the lowest price you are willing to accept (in the case of a sell order).
- Buy Limit Order: A buy limit order can only be executed at the limit price or at a lower price. This means that if the market price of the security reaches or exceeds the limit price you specified, your order will be executed at that price or better. However, if the market price remains below your limit price, your order may not be filled at all.
- Sell Limit Order: A sell limit order can only be executed at the limit price or at a higher price. Similarly, if the market price of the security reaches or falls below the limit price you specified, your order will be executed at that price or better. But if the market price remains above your limit price, your order may not be filled.
Limit orders give you more control over the price at which your order is executed, but they do not guarantee that your order will be filled. They allow you to set a price range within which you are willing to trade, but they do not ensure that you will actually trade at that price or within that range. Limit orders are particularly useful for controlling risk and ensuring that you do not pay more than a certain price for a security.
11/13/2024 07:21am
