What Is a Limit Order?

A limit order is an instruction to a broker or other financial professional to buy or sell a security at a specific price. This type of order allows investors to control the exact price they are willing to pay for a stock, bond, mutual fund, or other investment. The investor can also specify the maximum amount that he/she is willing to spend on the purchase. Limit orders provide more control over trades than market orders and help protect against sudden changes in prices due to market volatility.

Limit orders may be used by both long-term and short-term investors depending on their goals and strategies. Long-term investors often use limit orders when buying stocks as it helps them avoid paying too much for shares while still getting into positions quickly if desired prices become available. Short-term traders may use limit orders when selling securities as it gives them greater control over exit points from positions without having to constantly monitor markets throughout the day.

See also  Correction

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *