Limit Orders
A limit order sets a maximum price for a buy or a minimum price for a sell, providing price control in exchange for execution uncertainty.
Price control
A buy limit at $25.00 should not execute above $25.00; a sell limit at $25.00 should not execute below $25.00. That protection can be valuable when spreads are wide or when precise price matters.
The important limitation
Reaching the limit price does not necessarily mean your order will fill. There may be orders ahead of yours, insufficient opposing liquidity, or the market may trade only briefly at the price before moving away.
Passive versus marketable limits
A limit order placed away from the opposite quote may rest in the book. A buy limit priced at or above the current ask can be immediately marketable while still capping the maximum buy price. Traders should understand how their broker handles routing and time-in-force instructions.
Partial fills
A 1,000-share limit order may receive only 200 shares if that is all the liquidity available to trade with it. Partial fills matter because the trader’s intended position size and risk calculations may no longer match the actual position.
Common mistake
Beginners sometimes use a limit order for an urgent exit because they want a specific price, then discover the market moved away without filling them. Price control and execution urgency are competing objectives.
Common questions
Can a limit order fill better than the limit?
Yes. The limit defines the worst acceptable price, not necessarily the exact execution price.
Why did price touch my limit without filling me?
Other orders may have been ahead in the queue, available size may have been insufficient, or the displayed chart may not reflect the exact sequence relevant to your order.
Example: price control versus fill risk
A stock is offered at $15.05, but a trader is willing to pay no more than $15.00. A $15.00 buy limit protects that maximum price. If sellers never trade at $15.00, however, the order may remain unfilled while the stock moves higher.
Source discipline
Market structure details can vary by security, venue, broker and order-routing arrangement. For formal rules and current exchange procedures, use primary sources such as the SEC, FINRA and the relevant listing/trading venue. See our Sources & Methodology.