What is a buy limit order?

For example, a buy limit order could be placed at $2.40 when a stock is trading at $2.45. If the price dips to $2.40, the order is automatically executed. It will not be executed until the price drops to $2.40 or below. Another advantage of a buy limit order is the possibility of price improvement when a stock gaps from one day to the next.

What is an example of a limit order?

For example, if an investor wants to buy a stock, but doesn’t want to pay more than $20 for it, the investor can place a limit order to buy the stock at $20. If there aren’t enough shares in the market at your limit price, it may take multiple trades to fill the entire order, or the order may not be filled at all.

What is a stop-limit order?

A stop-limit order combines the features of both a limit and a stop order. A limit order is an order to buy or sell a certain security for a specific price. 1 One thing to keep in mind is that you cannot set a plain limit order to buy a stock above the market price because a better price is already available.

What is the difference between a limit and a market order?

There’s a distinct difference between a limit and a market order. A limit order sets a limit — a minimum or a maximum price at which your trade will get filled. For example, say you want to buy a stock and you think it’s worth buying at $5 … but the stock currently trades at $5.25.