Limit Order
Order TypesAn order to buy below or sell above the current market price. Limit orders guarantee price but not execution.
What Is a Limit Order?
A limit order is a pending order that triggers only when the market reaches a price you specify. A buy limit order sits below the current price and triggers when the price drops to your level. A sell limit order sits above the current price and triggers when the price rises to your level. Limit orders guarantee your entry price but may never be filled if the market does not reach that level.
Limit Order Examples
EUR/USD is currently trading at 1.0850. You want to buy at a better price, so you place a buy limit at 1.0820. If the price drops to 1.0820, your order fills and you own the position at 1.0820 instead of 1.0850, saving 30 Pips. If the price never drops to 1.0820, the order remains pending until you cancel it or it expires.
Limit Orders vs. Market Orders
Market Orders guarantee execution but not price. Limit orders guarantee price but not execution. Active traders often use a combination: market orders for breakout entries where timing is critical, and limit orders for pullback entries where price is critical. Many traders set Take-Profit levels using limit orders to automatically close profitable positions.
Related Terms
Market Order
An order to buy or sell immediately at the best available price. Market orders guarantee execution but not a specific price.
Stop-Limit Order
A two-part order that combines a stop trigger with a limit price. Once the stop price is hit, a limit order is placed instead of a market order.
Take-Profit
An order that automatically closes a position at a predetermined price to lock in profit. It is the profit-side counterpart to a stop-loss.
Fill or Kill (FOK)
An order that must be filled immediately and in its entirety, or it is cancelled completely. There is no partial fill.