A client’s order to buy or sell securities at a specific price or better. The order will only be executed the market reaches or betters that price.
What is a Limit Order?
A limit order is a type of order that is placed with a broker to buy or sell a stock or other financial instrument at a specific price or better. With a limit order, the investor specifies the maximum price they are willing to pay to buy a stock or the minimum price they are willing to accept to sell a stock. The order will only be executed if the stock price reaches the specified limit price.
For example, if an investor wants to buy a stock and they believe it is currently overpriced, they could place a limit order to buy the stock at a lower price. If the stock price drops to the specified limit price, the order will be executed and the investor will purchase the stock at the desired price.
Limit orders are a way for investors to control their costs and to ensure that they buy or sell a stock at a price that they are comfortable with. They are particularly useful for investors who are unable to monitor the market continuously and want to ensure that they are not paying more for a stock than they believe it is worth.
It is important to note that limit orders are not guaranteed to be executed and that the investor may end up missing out on an opportunity to buy or sell a stock if the stock price does not reach the specified limit price. Additionally, the limit price may need to be adjusted if market conditions change, in order to ensure that the order is executed in a timely manner.
