What is a limit order?
A limit order is an order type that tells the market that you want to buy or sell a security at a specific price or better.
When you’re ready to buy or sell a stock or fund, you have two main ways to determine the price you’ll trade at: the market order and the limit order. With market orders, you trade the stock for whatever the going price is. With limit orders, you can name a price, and if the stock hits it the trade is usually executed.
The best advantage of a limit order is that you get to name the price you will pay, and if the stock reaches that price, the order will most likely be filled. Occasionally the broker will even fill your order at a better price. Typically, you can set limit orders to execute up to three months after you enter them, meaning you don’t have to watch all the time to get your price.