Limit Order
A limit order is an order placed with a bank or brokerage to buy or sell a set amount of a financial instrument at a specified price or better; because a limit order is not a market order, it may not be executed if the price set by the investor cannot be met during the period of time in which the order is left open. Limit orders also allow an investor to limit the length of time an order can be outstanding before being canceled.
While the execution of a limit order is not guaranteed, it does ensure that the investor does not miss the opportunity to buy or sell at the target price point if it is dealt in the market. Depending on the direction of the position, a limit order is sometimes referred to as a buy limit order or a sell limit order. For example, a buy limit order that stipulates the buyer is not willing to pay more than $30 per share, while a sell limit order may require the share price to be at least $30 for the sale to take place.
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Steve
The Options Coach