Stock limit order
Family II · Orders
Not to be confused with limit order, stop limit order, sell limit order.
Stock limit order is an order type that sets both a quantity and a maximum or minimum acceptable price for a stock transaction. A buy limit executes only at the limit price or lower; a sell limit executes only at the limit price or higher. If the market never reaches the limit, the order remains unfilled or expires, depending on its time-in-force instruction.
How a stock limit order works
A stock limit order specifies a limit price alongside the quantity. For a buy, the limit is the highest price the trader will pay; for a sell, it is the lowest price the trader will accept. Execution can occur at a better price than the limit, but never at a worse one.
Unfilled limit orders rest in the order book until they execute, are cancelled, or reach their time-in-force expiry. Common time-in-force values include day, good-till-cancelled, and immediate-or-cancel, though the exact set varies by venue and broker.
Because the order does not chase the market, it offers price certainty but not execution certainty. A limit set away from the current market may never trade.
Worked example
The order fills at $47.90 because it is better than the $48.00 limit. The limit caps the total cost at $9,600.00; any ask above that price would leave the order unfilled.
Considerations
- Price versus speed: a limit order prioritises price; a market order prioritises execution.
- Partial fills: a large limit order may execute in several parts at different prices, all at or better than the limit.
- Gapping markets: if a stock opens beyond the limit, a buy limit will not fill at the worse opening price.
- Fees and rules: commission structures, order-type availability, and time-in-force options vary by broker and jurisdiction.
Often confused with
- limit order
- A limit order is the general order type across any instrument, whereas a stock limit order applies specifically to equities; the visible sign is the underlying asset named in the order ticket.
- stop limit order
- A stop limit order stays dormant until a stop price is touched and then submits a limit order, while a stock limit order is active immediately; the visible sign is the presence of two prices, a stop and a limit.
- sell limit order
- A sell limit order is the sell-side version, requiring a price at or above the limit, whereas a stock limit order can be either a buy or a sell; the visible sign is the side field marked sell.