Business, Legal & Accounting Glossary
An order to a broker to buy a specified quantity of a security at or below a specified price, or to sell it at or above a specified price (called the limit price). This ensures that a person will never pay more for the stock than whatever price is set as his/her limit. This is one of the two most common types of orders, the other being a market order. opposite of no limit order.
A limit order is an order to buy or sell a stock at a specific price or better.
In trading, a limit order is an order to buy or sell securities for a fixed price or better.
For example, an investor can place a limit order to sell shares of company ABC for $100 or more, even if the stock is currently trading for under $95. Such a limit order would be called an above the market order. A limit order can include instructions limiting the time it remains in effect. For instance, a limit order could be good until the end of the day or good until cancelled. A limit order book is a list of all buy and sell limit orders in effect for a particular security. In after-hours trading, a limit order is beneficial because lower volume can lead to greater price volatility.
A limit order describes the instruction an investor gives to his broker setting out how much he’s prepared to pay for shares (or any other asset for that matter).
In other words, if you say to your broker, “Pay up to six quid for LloydsTSB shares”, you’re specifying the maximum price you’re willing to pay, or setting a limit order.
Similarly, when selling shares (or any other asset), you may say to your broker “Get the best price you can, but don’t take less than £5 a share.”
If you’ve got a broker helping you to manage your share portfolio, you may wish to instruct him of prices at which he should buy or sell.
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.
A limit order is not guaranteed to execute. A limit order can only be filled if the stock’s market price reaches the limit price. While limit orders do not guarantee execution, they help ensure that an investor does not pay more than a pre-determined price for a stock.
away from the market
stop-limit order
buy limit order
To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.
Definitions for Limit Order are sourced/syndicated and enhanced from:
This glossary post was last updated: 5th November, 2021 | 0 Views.