How a limit order works
A limit order tells the broker to trade only at a specified price or better, never worse. A buy limit fills at your price or lower; a sell limit fills at your price or higher. It gives you price control, the opposite trade-off of a market order: you are guaranteed the price if you fill, but you are not guaranteed to fill at all if the market never reaches your level.
Worked example
A stock trades at $50.20 but you only want to buy at $50.00. You place a buy limit at $50.00. If the price dips to $50.00 or below, you fill at $50.00 or better; if it never dips, you simply do not buy. Compared with a market order that would fill instantly at $50.20, you saved 20 cents but risked missing the trade entirely.
When to use a limit order
Use a limit order when the exact price matters more than certainty of execution: entering at a specific level, taking profit at a target, or trading thin instruments where a market order would suffer slippage. On Volity, limit orders are the disciplined way to enter at planned levels and to set take-profit targets without watching the screen.
Why it matters
The limit order is how you refuse a bad price, which protects you from slippage but introduces the risk of no fill, so it is the right tool only when price beats certainty. Match the order type to which one matters for the trade. Related: market order and fill.
Learn more in our forex trading guide.
