Definition
An order to buy or sell only at a set price or better.
The story
Say a stock trades at $50 and you place a limit order to buy at $48. It will only fill at $48 or lower. If the price never drops that far, nothing happens. You control the price, but you give up the certainty of getting filled.
Why markets watch it
Limit orders are how traders control the price they pay, at the cost of sometimes missing the trade.
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms