Glossary · Orders & trading · Beginner-friendly
Limit order
In plain English
A limit order says “only buy/sell at this price or better.” You control the price, but you might not get a fill.
Everyday analogy: Leaving a fixed offer at a garage sale - maybe they accept, maybe they don’t.
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Why it matters
Limit orders buy price control. The cost is non-fills - and the temptation to chase afterward.
A bit more detail (optional)
When it fits
Patient entries, thin names, and avoiding bad fills all favor limits. The trade-off: you may not get filled.
Risk
Chasing after a missed fill can be more expensive than accepting a slightly worse limit in the first place.
Simple examples
Limit left behind
You bid $40.50; the stock never trades there and rallies to $44. Your discipline saved the bad fill - and missed the move.
Missed fill, chased entry
Your limit never hits; you buy higher in frustration - worse than either waiting or using a realistic limit.
Easy mistakes to avoid
- Setting limits so far from the market that they never work
- Chasing emotionally after missing a fill
- Using limits as a substitute for a thesis
Remember: Limits buy price control - accept that non-fills are part of the deal.