What is Limit Order

What Is a Limit Order?
A limit order is an order to either buy stock at a designated maximum rate per share or market supply at a minimum cost share. For buy limit orders, you’re basically establishing a cost ceiling– the greatest price you ‘d be willing to spend for each share. For sell limit orders, you’re setting a rate floor– the most affordable amount you ‘d want to approve for every share you market. This means that your order may only be filled at your designated rate or much better. However, you’re likewise guiding your order to fill just if this problem occurs. Limit orders permit control over the rate of an execution, but they do not guarantee that the order will be implemented instantly and even whatsoever.

KEY TAKEAWAYS

» A limit order guarantees that an order is filled at or better than a specific price level.
» A limit order is not guaranteed to be filled, however.
» Limit orders control execution price but can result in missed opportunities in fast-moving market conditions.
» Limit orders can be used in conjunction with stop orders to prevent large downside losses.

Limit order advantages

Why might traders consider entering a limit order?

» Price ceilings/price floors
» Pre-market and after-hours sessions

Limit order risks

» Risk of no execution
» Risk of partial fills

Four Different MT4 Pending Orders

In MT4 there are four different types of pending orders that you can select from and for ease I have added them below and what they are used for;

Buy Limit – Order to go long at a level lower than current market price

Sell Limit – Order to go short at a level higher than current market price

Buy Stop – Order to go long at a level higher than current market price

Sell Stop – Order to go short at a level lower than market price

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