Limit order

A limit order is one of the most popular orders among traders like market and stop orders. It is often chosen by those traders who are ready to wait for a more attractive price.

Thus, a limit order allows traders to buy or sell assets at the settled price.

Placing the order, traders indicate the highest price at which they are ready to buy the asset and the lowest price at which they may sell it. Investors can close the limit order manually or indicate an expiration date.

This order is a perfect solution for those investors who want to control the trading process. However, there is a risk since the trade may not be executed. This is the main difference between the market and limit orders. In the first case, trades almost always take place but the price could differ from the settled one. In case of the limit order, the price is always accurate but a transaction is not always executed.

To apply the limit order, speculators should indicate the limit price at the time of placing the transaction request.

The limit order could be successfully used when trading volatile securities. In this case, investors will see a price that is better than the current one.

In addition, this type of order suits those who do not want or has no opportunity to follow the trading process. However, if a trader is ready to sell an asset and does not expect a particular price, a limit order will not allow this and the transaction could be missed.