Glossary
What is a limit order?
In one sentence
A limit order buys or sells only at a price you specify or better. It gives you price control, but may never execute.
With a limit order you set the price. A buy limit executes only at or below your figure; a sell limit only at or above it. If the market never reaches your price, the order simply sits unfilled.
The advantage is certainty about price and protection from slippage — you cannot be filled at a level you did not accept. This makes limit orders the sensible default in volatile or thin markets, where a market order can fill far from the last quoted price.
The trade-off is execution risk. In a fast move your order may be skipped entirely, and if you were trying to exit a falling position, “not filled” can be an expensive outcome.
For example
In a thin market a limit order is usually the safer choice, because a market order can fill several percent away from the screen price.