Orders and trading · updated October 21, 2026
What is a limit order and how does it work
A limit order tells your broker the highest price you will pay when buying, or the lowest price you will accept when selling. The price is guaranteed, the trade is not: if the market never reaches your price, the order stays unfilled.
How it works
You place a buy order with a $48 limit: it only fills if someone sells at $48 or less. Until then, the order waits in the order book. You also pick how long it stays active: today only (day) or until you cancel it (GTC, usually capped at a few weeks or months depending on the broker).
Worked example
A stock trades at $50 now. You place a limit buy order at $48 for 100 shares, valid for a month.
If the price dips to $48, you buy for $200 less than today. If it does not, you buy nothing.
Worth knowing
Limit orders are the most common order type among price-conscious investors. On exchanges where many stocks trade thinly, they are close to essential.
When a limit order can fool you
Partial fills: if only 30 shares are offered at your price, you buy 30 and the rest keeps waiting; some brokers charge a fee for each part. Too tight a limit: waiting for 2% lower can make you miss a stock that then rises 30%. Forgotten orders: a good-till-cancelled order can fill weeks later, when you no longer expect it.
Related terms
Learn it in the Academy
Questions about a limit order
What happens if the price never reaches my limit?
Nothing. The order stays active until it expires or you cancel it, and your money stays in the account (usually set aside for the order).
Can I buy cheaper than my limit?
Yes. When buying, the limit is a maximum. If someone sells cheaper, you get the better price.
What does GTC mean?
Good Till Cancelled: the order stays active until you cancel it. Most brokers cancel it automatically after 30-90 days.
These explanations are for information only. They are not a recommendation to buy or sell.
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