Limit order
A limit order is an instruction to buy or sell only at a price you set, or better. A buy limit fills at or below your price; a sell limit at or above it. According to the SEC and FINRA, your price is protected but the order may never fill.
How does a limit order work?
You tell the platform two things: the amount and the worst price you will accept. FINRA, the US brokerage self-regulator, explains the rule. A buy limit executes only at the limit price or lower. A sell limit executes only at the limit price or higher. If the market never reaches your level, the order simply waits.
What does a limit order look like in practice?
The SEC's investor site gives a stock example. You want shares of a company called ABC but will pay no more than $10. A limit order at $10 executes only if ABC trades at $10 or lower. If the price stays above $10, you never buy, even if it later rises sharply without you.
How is a limit order different from a market order?
| Market order | Limit order | |
|---|---|---|
| Price | Best available, not guaranteed | Your price or better |
| Execution | Most certain | May not happen at all |
| Main risk | Paying more than the price you saw | Missing the trade |
A market order buys at the ask, so you pay the spread straight away. A limit order lets you choose where you stand, at the cost of certainty.
What are the risks of using limit orders?
- No execution. The SEC says limit orders are not guaranteed to execute, and FINRA warns there is a chance the order does not execute at all.
- Stop-limit gaps. A stop-limit order becomes a limit order once triggered. If the price jumps past your limit, it may never fill, leaving you holding the position.
- Different platform rules. These definitions come from US regulators describing stock orders. Crypto platforms may label and handle orders differently, so read the platform's own order rules first.
Frequently asked questions
Does a limit order guarantee my price?
It protects your price if it fills: you get your limit or better. It does not promise the order will fill at all.
What is a stop-limit order?
The SEC describes it as an order that turns into a limit order once a stop price is reached. It avoids a bad fill but, if the price moves away from the limit, it may not execute.
Sources
- SEC Investor.gov, Investor Bulletin: Understanding Order Types — investor.gov (accessed 2026-10-02)
- SEC Investor.gov, Investor Bulletin: Stop, Stop-Limit, and Trailing Stop Orders — investor.gov (accessed 2026-10-02)
- FINRA, Order Types — finra.org (accessed 2026-10-02)