An instruction to buy below or sell above the current market price, guaranteeing price but not execution.
A buy limit is placed below the current price, a sell limit above. The order only fills if the market reaches the specified level, and typically at that level or better. Limit orders are popular for entering on pullbacks or exiting at a target without monitoring screens.
Because a limit order may never be triggered, traders must manage the risk of a missed entry if the market moves away from the limit level.