What is Limit Order, Meaning, Definition | Angel One (2024)

FAQs

What is Limit Order, Meaning, Definition | Angel One? ›

A Limit Order is a strategic tool utilized by investors to set a desired price for buying or selling a security. By setting a limit price

A limit order allows investors to purchase or sell a stock at a specified price or better. In case of buy limit orders, the order will only get executed below or at the limit price, while for selling limit orders, the order will only get executed above or at the limit price.

What is a limit order and how does it work? A limit order is an order to buy or sell a stock with a restriction on the maximum price to be paid (with a buy limit) or the minimum price to be received (with a sell limit). If the order is filled, it will only be at the specified limit price or better.

Investors can use two common types of orders to buy or sell stocks: market orders and limit orders. Market orders often execute right away at whatever price the market is charging. Limit orders won't trigger until the market price meets whatever price the investor is looking for.

Unlike a market order in which the trader buys at the current offer price, whatever that may be, a buy limit order is placed on a broker's order book at a specified price. The order signifies that the trader is willing to buy a specific number of shares of the stock at the specified limit price.

Your withdrawal request can get rejected for the following reasons: You have entered a new trade. Margin requirement has changed. Inadequate balance in your account.

To help avoid this situation, some traders place their limit order prices slightly above the best ask price for buy limit orders or slightly below the best bid price for sell limit orders. This allows for a small amount of price fluctuation while still protecting the trader from an unexpected price execution.

The first disadvantage of limit orders is that they may not be executed. When a limit order is placed, it will only be executed if the market price reaches the specified limit price. If the market price never reaches the limit price, the order will not be executed.

Bottom line. Your choice of market order or limit order depends on the specific circ*mstances of the trade, but if you're worried about not getting a certain price, you can always use a limit order. You'll ensure that the transaction won't occur unless you get your price, even if it takes longer to execute.

Limit orders can be used in conjunction with stop orders to prevent large downside losses. A limit order is usually valid for either a specific number of days (i.e. 30 days), until the order is filled, or until the trader cancels the order.

Can you cancel a limit order? ›

Investors may cancel standing orders, such as a limit or stop order, for any reason so long as the order has not been filled yet. Limit and stop orders may stand for hours or days before being filled depending on price movement, so these orders can logically be canceled without difficulty.

Who handles limit orders? They are handled by brokerage platforms, which route them to exchanges or trading venues, ensuring they are executed once the specified price condition is met, subject to available liquidity.

In a limit order, the investor has to specify a quantity and the desired price at which he or she wants to make the transaction. Say a share is currently trading at Rs 100 per share but the investor wants to buy it at Rs 95 per share. A limit order of say 10 shares at Rs 95 per share is placed.

Bottom line. Your choice of market order or limit order depends on the specific circ*mstances of the trade, but if you're worried about not getting a certain price, you can always use a limit order. You'll ensure that the transaction won't occur unless you get your price, even if it takes longer to execute.

Buy limit orders are instructions from traders to purchase an asset at a specified price or better, but only if the market price reaches that level. When price gaps occur above the market price, buy limit orders may not be executed immediately if the asset's price jumps to a level beyond the specified limit.

A limit order lets you set the rate at which you want to exchange your money from one currency to another. If that rate becomes available, the exchange will happen automatically. You can set an expiry date for your limit order, which can be up to 3 months in the future.

A single GTT is a trigger which is valid for only one time, after a limit order is placed. In case a limit order is placed due to the Trigger Price being breached or for any other reason on any particular day, but the limit order is not exactly met on the same day, such GTTs will be required to be placed once again.