Limit order meaning, in plain words
A limit order is an instruction to buy or sell only at a price you choose, or at a better price. It is a pending order: it waits in the system until the market reaches your price. Until then, no position is opened.
A market order works differently. It fills now, at whatever price is available. A limit order fills later, or never, but not at a worse price than the one you set.
Limit orders come in a buy version and a sell version.
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Buy limit and sell limit
| Order | Where you place it | What you want |
|---|---|---|
| Buy limit | Below the current price | To buy cheaper than now |
| Sell limit | Above the current price | To sell higher than now |
Buy limit example. A currency pair is trading at price A. You want to buy, but only if it comes down to a lower price B. You place a buy limit at B. If the price falls to B, the order fills at B or lower. If the price never falls that far, nothing happens.
Sell limit example. The same pair trades at price A. You want to sell, but only if it rises to a higher price C. You place a sell limit at C. If the price reaches C, the order fills at C or higher. If it turns back before C, the order stays open or expires.
A limit order is a way to set an entry price. It says nothing about whether the market will actually go there, or about what happens after you are in the trade.
Price control versus fill uncertainty
A limit order controls price. It does not guarantee a fill.
- Price: you will not get a worse price than your limit. If the market jumps past your level, for example after a price gap, you may get a better price.
- Fill: the order may never execute. The market can come close to your level and turn away.
- Touch without fill: on exchanges, orders at the same price wait in a queue. The price can touch your limit while your order stays unfilled, or it may fill only in part.
A market order works the opposite way: it fills almost certainly, but the price can move against you through slippage.
Precise rules for experienced traders
In MetaTrader and most OTC/CFD platforms (where you trade with a broker, not on an exchange), the trigger depends on the side of the quote:
- A buy limit triggers when the ask falls to or below the limit price.
- A sell limit triggers when the bid rises to or above the limit price.
Charts usually draw the bid. So a buy limit line can look "hit" on the chart while the ask, which is higher by the spread, never reached it. When spreads widen, at session opens or around news, this difference grows. See bid and ask for the details.
Other points to know:
- Execution policy. Whether a triggered limit fills exactly at your price, at a better price or with partial volume depends on the platform and the execution model. See broker execution models and check the conditions of the provider you use.
- Expiry. A pending order can last until you cancel it or until a set time. See order expiry.
- Margin. Margin is usually reserved only once the order fills. A fill can still bring your margin level close to a margin call if your position size is too large.
- Attached orders. You can add a stop loss and take profit to the pending order, so they are active from the moment it fills.
Limit, stop and stop-limit orders
A limit order waits for a better price than now. A stop order waits for a worse price: buy above the market or sell below it, often used to enter on a breakout. A stop-limit order combines both. A stop price activates a limit order, which then fills only at the limit price or better.
Risk
A good entry price does not make a trade safe. Leveraged forex and CFD trading can lose money fast, and a filled limit order can move into loss straight away. Size positions with risk management in mind and practise on a demo account first.
One legal point for readers in Pakistan: per the SECP, offshore forex/CFD platforms operate without regulatory approval in Pakistan. See law and regulators.
Frequent questions
What is a pending order?
A pending order waits until the price reaches a level you set. Limit orders and stop orders are both pending orders.
Does a limit order guarantee execution?
No. It controls the worst price you accept. The market may never reach that price, and on exchanges the order may fill only partly.
Why did price touch my buy limit but the order did not fill?
The chart usually shows the bid, but a buy limit needs the ask to reach your price. The spread can keep the ask above your level.
Can a limit order fill at a better price?
Yes. If the market gaps through your level, the order can fill at the better available price, depending on the platform's execution rules.
Should I use a buy limit or a sell limit?
That depends on your own plan. This page only explains how they work. It is not a recommendation to buy or sell anything.