Buy limit order

A buy limit is a pending instruction with a price attached. It sits inactive until the market reaches the stated level and can only be filled at that price or better, where better means lower. Because a buy fills at a price no worse than the one specified, the order is placed below the current market: an instruction to buy at a level above the market would be executable immediately, which is not a limit order at all, and platforms reject it as an invalid price.

The guarantee a limit order carries is over price and not over execution. If the market never reaches the level, nothing happens. If it reaches the level but the interest resting at that price is taken by other participants before this instruction is reached, the order can be passed over entirely or filled in part. That is the opposite trade off from a market order, which is certain to execute and uncertain in price. Neither instruction is better than the other, because they answer different questions.

Two details catch people. A limit level is compared against the side of the quote that would fill it, so a buy limit is triggered by the ask rather than by the line drawn on the chart, which on most platforms is the bid, and the distance between them is the spread. And a limit does not sidestep a gap: where a market opens far below the level, the order fills at the opening price, which is a better price than the one specified and reflects a market that has moved a long way rather than an advantage secured.