What is a limit order?

A limit order lets you set the maximum price you’re willing to pay when buying, or the minimum price you’ll accept when selling, and the order only executes if the market reaches that price with a matching counterparty available. Unlike a market order, a limit order gives you price control but not execution certainty; it can fill completely, partially, or not at all if the stock never reaches your price during the order’s validity. You use limit orders when you have a specific entry or exit price in mind, especially in a volatile or less liquid stock where a market order risks a bad fill. The trade-off is real: setting a limit too far from the current market price often means the order sits pending and expires unfilled, while setting it too close to the market defeats the purpose of price protection.