A limit order is an instruction to buy or sell only at a specified price or better, giving you price control but no guarantee it will execute.
A limit order lets you set the exact price at which you are willing to buy or sell. A buy limit executes only at or below your price; a sell limit executes only at or above it.
This gives you precise control over your entry or exit price, which is valuable in volatile markets or when trading less liquid assets where slippage is a concern.
The downside is that there is no guarantee of execution. If the market never reaches your specified price, the order simply sits unfilled, and you may miss the move entirely.
Traders use limit orders to enter positions at target prices, take profit at predetermined levels, and avoid overpaying during sudden spikes. They are the opposite of market orders, which prioritise speed over price.
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