Limit order definition
Limit order
A limit order is an instruction to execute a trade when the market reaches a price you specify. It can be used to enter a new position or close an existing one.
For example, assume you hold a long position in Glencore stock, currently trading at $2.90, and want to take profit if the price reaches $3.00. You could place a sell limit order at $3.00. If the market reaches that level and sufficient liquidity is available, the order may be executed automatically.
Buy vs sell limit orders
A sell limit order is placed above the current market price, while a buy limit order is placed below it.
For example, if Glencore is trading at $2.90 and you want to buy if the price falls to $2.80, you could place a buy limit order at $2.80. The order would only become eligible for execution when the applicable market price reaches your specified level.
How the order is filled may depend on the trading platform, order size and available liquidity. Larger orders may be filled across multiple liquidity levels or may be partially filled if sufficient liquidity is not available.
See How are limit orders processed on Web Trader? and How are limit orders processed with Depth of Market on MT5? for platform-specific details.
The opposite of a limit order is a stop order. Stop orders are triggered when the market reaches a specified price and may execute at the next available price.