Limit order

An instruction to buy at or below a stated price, or to sell at or above one. A buy limit therefore rests below the current market and a sell limit above it, which is the arrangement that gives the order its character: it waits for the market to come to the price rather than paying whatever the market asks. It stays live until it is filled, cancelled, or expires under its time in force.

Filling requires two conditions, not one. The market has to reach the price, and there has to be interest available on the other side when it gets there. On an exchange the order joins a queue at its price level and orders that arrived earlier are filled first, so a level can trade without the whole queue being satisfied and a partial fill is an ordinary outcome. Where the market gaps through the level instead of trading at it, the fill is taken at the next available price, which for a limit order can only be better than the price named.

Two confusions are routine. The first is expecting a touch to guarantee a fill: a price printed once is not the same as size available at that price, and an order can sit unfilled at a level the market visibly reached. The second is with a stop order, which is the mirror image. A buy limit sits below the market and a buy stop sits above it, and a stop is filled at the next available price once triggered rather than at the price named, so the same number typed into two order types produces opposite behaviour and opposite risks.