Glossary
What is Limit Order? Meaning, Example & Why It Matters
An order to buy or sell only at a specified price or better, giving you control over the execution price.
A limit order lets you set the maximum price you are willing to pay when buying, or the minimum price you will accept when selling. The order executes only at that price or better. If the market does not reach your price, the order stays pending in the exchange order book until it executes, expires or you cancel it.
Why Limit Order matters to you
Limit orders protect you from unexpected price moves and slippage, which is especially useful in illiquid stocks, options with wide spreads, and volatile periods. The trade-off is that your order may not fill, or may fill only partly, if the market moves away from your price.
Most limit orders are valid only for the trading day and are cancelled at market close if not executed. For longer validity, some brokers offer GTT orders. Remember that charges are levied on executed trades, so if a limit order fills in several parts across days, you may pay brokerage more than once depending on your broker.
Practical tip: set limit prices realistically, close to the current bid or ask, if you want a high chance of execution. Check the market depth before placing a large limit order to see how much quantity is available near your price.
Example: Illustrative only: if a stock is trading at ₹250 and you place a buy limit order at ₹245, it will only execute if a seller is willing to sell at ₹245 or lower.
See it in rupees: every charge and tax on a real trade, at every broker. Open the brokerage calculator
Related terms
- GlossaryMarket Order
An order to buy or sell immediately at the best price currently available in the market.
- GlossaryStop-Loss Order
An order that triggers a buy or sell once the price reaches a set level, used to limit losses on a position.
- GlossaryGTT Order (Good Till Triggered)
A standing instruction that places an order automatically when the price reaches your trigger, valid for an extended period.
- GlossarySlippage
The difference between the price you expected for a trade and the price at which it actually executed.
Frequently asked questions
What happens if my limit order does not execute?
It stays pending until the end of the trading day and is then usually cancelled, unless you used a longer-validity order type.
Can a limit order execute at a better price?
Yes. A buy limit can fill below your price and a sell limit above it, if such prices are available.
Is a limit order safer than a market order?
It controls price risk, but carries the risk of not executing. Which is better depends on whether price or certainty of execution matters more to you.