Definition
A limit order is an instruction to buy at a specified price or lower, or sell at a specified price or higher.
Price control does not guarantee a fill
A buy limit states the highest acceptable price, while a sell limit states the lowest. The order can fill only when compatible liquidity is available at that price or a better one. If the market never reaches the limit, the order can remain open or expire without trading.
A large order may fill in parts because only part of the requested quantity is available. Time-in-force instructions such as good til cancelled or immediate or cancel determine what happens to the unfilled amount.
Where the order sits
A limit order that does not match immediately can rest on the order book and add liquidity. A marketable limit order can match existing orders immediately while still enforcing its price boundary. Venue rules determine whether a resting order receives maker treatment.
What it does not mean
A limit order controls the acceptable price but not whether or when the trade completes. A market order prioritizes immediate execution and does not provide the same price boundary.
Where this term fits
Questions about limit order
- Is a limit order guaranteed to execute?
- No. It executes only when compatible liquidity is available at the limit price or a better price.
- Can a limit order fill at a better price?
- Yes. The limit is the worst acceptable price, so an order may receive a more favorable fill when the order book allows it.
- Can a limit order fill only partly?
- Yes. If less liquidity is available than the requested size, the order may receive one or more partial fills.
See these concepts in context
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