An order that tells a broker to buy or sell an investment only at a specified price or better is a limit order.
A buy limit order sets the maximum price the investor will pay. A sell limit order sets the minimum price the investor will accept. The order executes only if the market reaches a price that satisfies the limit, and execution is not guaranteed.
This differs from a market order, which seeks immediate execution at the best available current price but does not guarantee the exact price. A stop order is another distinct instruction: it becomes a market order, or sometimes a limit order depending on the type, after a specified trigger price is reached.
Limit orders can help investors control price, particularly in volatile or thinly traded markets. However, an order may remain unfilled if the market never reaches the limit, or only part of it may execute if insufficient shares are available. Investors should also check the order's time-in-force instructions.