What Is Limit Order?
A limit order specifies the maximum price a buyer is willing to pay or the minimum price a seller will accept. The order will only execute at the limit price or better; if the market doesn't reach the limit, the order doesn't fill.
Limit orders are the standard tool for traders who care about precise entry — for example, buying a pullback to a specific support level. The trade-off is execution risk: if the market moves away without filling, the trade is missed.
Limit orders also offer maker rebates on many exchanges. Because they add liquidity to the order book (versus market orders which remove it), exchanges often refund or reduce fees for limit orders. For high-frequency traders this matters; for occasional retail traders, the more important benefit is price precision.
Related terms
- Market Order — An order to buy or sell immediately at the best available price — guarantees execution, not price.
- Slippage — The difference between the expected fill price of an order and the actual execution price.
- Liquidity — The ease with which an asset can be bought or sold without significantly affecting its price.