Limit OrderLMT
A limit order buys or sells only at a price you specify or better, so you control the price — but the order may never be filled.
A limit order turns “buy now, whatever it costs” into “buy, but not above this price”. It is the main tool for controlling what you pay or receive, and it is essential in thinly traded markets, outside regular hours, and whenever the spread is wide. The trade-off is simple and unavoidable: the price is protected, the execution is not.
- Category
- Order Types
- Reading time
- 7 min
- Also called
- Buy limit, Sell limit, Limit buy
- Updated
A limit order in plain words
Imagine telling a shop: “I’ll buy this jacket if the price drops to $80 or less.” If it goes on sale at $75, you get it at $75. If it never drops below $85, you never buy it. That is a buy limit order.
A sell limit order is the mirror image: “sell my shares, but only for $60 or more.” Either way, you name the worst price you will accept, and the market decides whether it ever reaches it.
How a limit order works, step by step
Choose the limit price
A buy limit can only execute at the limit price or lower; a sell limit only at the limit price or higher.1
Choose how long it stays active
Unless you specify otherwise, orders are day orders that generally cancel at the end of regular trading hours. A good-’til-canceled (GTC) order stays open until it is filled or cancelled, within limits your broker sets.1
The order waits in the order book
A buy limit below the current ask (or a sell limit above the current bid) cannot fill immediately. It rests in the order book, visible to the market as liquidity others can trade against.
The market reaches your price — or does not
The order can only be filled if the market price reaches the limit.1 Even then, orders placed earlier at the same price are usually filled first, so a touch of your price does not guarantee a fill.
It fills fully, partly, or not at all
If only some shares are available at your price, you may get a partial fill. The rest keeps waiting until it fills, expires or you cancel it.
Worked examples
Example 1 — A buy limit that fills
FilledA stock trades at $50. You place a buy limit at $48 for 100 shares. Two days later the price dips to $47.90 and recovers.
| Limit price | $48.00 |
| Lowest price reached | $47.90 |
| Your fill | $48.00 or better |
| Saving vs. a market buy at $50 | $200.00 |
Patience paid off: you bought $2 below where a market order would have filled.
Example 2 — A buy limit that never fills
Not filledSame order, but the price only drops to $48.30, then rallies to $56.
| Limit price | $48.00 |
| Lowest price reached | $48.30 |
| Your fill | None |
| Move you missed (100 × $6 from $50) | $600.00 |
The limit protected your price but cost you the trade. This is the cost of every limit order: the opportunity you miss when the market does not come to you.
Example 3 — A marketable limit in a thin stock
Price capA small stock is quoted $9.80 bid / $10.20 ask with few shares on offer. Instead of a market order, you place a buy limit at $10.25 for 200 shares.
| Highest price you can pay | $10.25 |
| Fills immediately at the ask if available | $10.20 |
| Maximum cost (200 × $10.25) | $2,050.00 |
A limit just above the ask behaves like a market order when there is enough stock, but caps your price if the offers suddenly move up. Many traders use this instead of plain market orders.
The price has to come to you
Limit order vs. market order vs. stop-limit
| Aspect | Limit | Market | Stop-limit |
|---|---|---|---|
| Active | Immediately, waiting at your price | Immediately | Only after the stop price is reached |
| Price | Your limit or better1 | Not guaranteed1 | Your limit or better once triggered1 |
| Fill guaranteed? | No | Generally yes | No |
| Typical use | Entries, profit targets, thin markets | Urgent exits in liquid markets | Protective exits with a price floor |
When traders use limit orders
Buying pullbacks
Placing a buy limit at a support level lets you enter at a planned price without watching the screen.
Taking profit
A sell limit above the current price is the usual way to set a take profit.
Thin and wide markets
Where spreads are wide or depth is low, a limit order stops you from paying far more than the quote.
Extended hours
Many brokers accept only limit orders before and after the regular session, to protect investors from unexpectedly bad prices.2
Advantages and disadvantages
Advantages
- You never pay more (or receive less) than your limit.1
- Lets you plan entries and exits in advance.
- Resting orders may qualify for lower maker fees on some exchanges.
- Essential in thin markets and outside regular hours.
Disadvantages
- Execution is not guaranteed.1
- You can miss a move by a few cents.
- Partial fills can leave you with an odd position size.
- Forgotten GTC orders can fill long after your view has changed.
Going deeper
Read as far as you need. Each level builds on the one before it.
Buy limits go below, sell limits go above
Beginner
A buy limit set above the current ask fills straight away, like a market order with a price cap. A buy limit below the market waits. Mixing these up is the most common beginner error with limit orders.
Time in force and queue priority
Intermediate
Day orders generally expire at the end of the regular session; GTC orders persist until filled or cancelled, though brokers may cap how long.1 Review open GTC orders regularly.
At the same price, orders are usually filled in the order they arrived. If the market only touches your price briefly, orders ahead of yours may absorb all the available volume. See Queue Position.
Maker fees, hidden size and conditional orders
Advanced
On many exchanges an order that rests in the book and adds liquidity is charged a lower maker fee than one that takes liquidity immediately. See Maker and Taker Fees.
Brokers also offer conditional combinations — for example an order that triggers two linked exits, a limit to take profit and a stop to limit the loss, where filling one cancels the other.3
Common mistakes
Setting the limit on the wrong side
A buy limit above the market fills instantly at the ask — fine if intended, surprising if not.
Chasing with constant edits
Moving the limit up every few seconds to follow the price turns a limit order into an expensive market order.
Forgetting open orders
A GTC buy order placed weeks ago can fill after bad news has pushed the price down — exactly when you no longer want it.
Expecting a fill when the price touches
Touching your price is not enough if others are ahead of you in the queue.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- A buy limit fills at the limit or lower; a sell limit at the limit or higher.
- Limit orders control price but may not fill — the cost is missed trades.
- Orders are day orders unless you choose GTC; review open orders regularly.
- Use limit orders in thin markets, with wide spreads and outside regular hours.
Frequently asked questions
Why didn’t my limit order fill when the price reached my limit?
Can a limit order fill at a better price than my limit?
What is a marketable limit order?
Further learning
- Market Order
The opposite trade-off: speed instead of price control.
- Take Profit
The most common use of a sell limit order.
- Bid-Ask Spread
Why limit orders matter most when the spread is wide.
- Stop Loss
How stop and stop-limit orders differ from plain limits.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- Investor.gov (SEC). Understanding Order Types – Investor Bulletin (opens in a new tab) Checked .
- Investor.gov (SEC). Extended-Hours Trading: Investor Bulletin (opens in a new tab) Checked .
- Fidelity. What Is A Conditional Order? (opens in a new tab) Checked .
Read more elsewhere
- Trading Metrics (our sister site): Fill Rate (opens in a new tab)
- Investopedia: Limit Order (opens in a new tab)
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. Trading Metrics is our sister site, under the same ownership; we are not affiliated with any other publisher linked above. Last reviewed . Report an error or request a source credit.