Limit Order on the Stock Exchange: What It Is and How to Use It

A limit order is an order to buy or sell an asset not at any price, but strictly at your specified price or better.

How a limit order differs from a market order

A market order is executed immediately at the current market price — you get execution speed, but you don't control the exact price of the transaction. A limit order, on the other hand, will only be executed when the asset's price reaches the level you specified or better — you sacrifice the guarantee of immediate execution for control over the price.

How it works in practice

When buying, you specify the maximum price you are willing to pay: the order will be executed at that price or lower. When selling, you specify the minimum price you are willing to accept: the order will be executed at that price or higher. If the market does not reach the desired level, the order simply remains unexecuted until you cancel it or its term expires.

When a limit order is useful

It is useful if you are targeting a specific entry or exit price and do not want to buy or sell at the current market price if it does not suit you. Limit orders also reduce the risk of execution at an unexpectedly disadvantageous price in a volatile market.

What is important to consider

The main compromise is the lack of execution guarantee: if the price never reaches the specified level, the order can remain unexecuted indefinitely. Limit orders are available in the "Stock Broker" trading terminal when placing a trade for stocks and other catalog instruments.

This material is for informational purposes only and is not an individual investment recommendation.