Limit Order

Instruction to execute an order for a stock only at a specified price or better. The broker continues the order until a specified date or until the customer terminates it.Assume an investor places a limit order to buy at $10 or less a stock now selling at $11. If the stock goes up to $20, the broker will not execute a buy order; if it falls to $10, the broker will execute a buy order immediately. Note that the broker does not buy a stock for the broker's own account. The broker brings a buyer and seller together and executes a transaction for a commission. Only a dealer (or a broker-dealer acting in its capacity as a dealer) ever actually buys or sells-i.e., takes an inventory position.

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An order placed with a brokerage to buy or sell a set number of shares at a specified price or better. Limit orders also allow an investor to limit the length of time an order can be outstanding before being canceled.

Depending on the direction of the position, limit orders are sometimes referred to more specifically as a buy limit order, or a sell limit order.

Investopedia Says:
Limit orders typically cost more than market orders. Despite this, limit orders are beneficial because when the trade goes through, investors get the specified purchase or sell price. Limit orders are especially useful on a low-volume or highly volatile stock.

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