Series 24: 5.5.2.2.1.2. Limit Orders

5.5.2.2.1.2. Limit Orders

A limit order is an order to buy or sell a security at a specific price or “better.” Buy limit orders mean buy at a specific price or lower (a lower price is better for a buyer); sell limit orders mean sell at a specific price or higher (a higher price is better for a seller). Buy limit orders are typically used when an investor wants to buy at a lower price than the market price and is thus waiting for the market to come down to the limit price. Sell limit orders are typically used when an investor is hoping to sell at a price above the market price and so the customer is waiting for the market to come up to the limit price. However, in industry parlance, “execution is