A limit order is an instruction that allows an investor to specify the maximum price they are willing to pay to buy a security and the minimum price they are willing to receive to sell a security. Investors can set limit orders when participating in various financial markets, such as stocks, forex, commodities, and financial derivatives.
Setting a limit order is a great way for investors to gain more control over their trades and increase their chances of buying or selling a security at their preferred price. As the order is executed automatically, investors do not have to monitor the markets closely. However, in fast-moving markets, there is no guarantee that the limit order will be executed even if the share price does reach the investor’s specified execution price.
An investor wants to purchase a stock that is currently trading at $30 per share. However, they believe that its price will dip momentarily before increasing again, and they are only willing to buy the stock at $27 per share. In this case, they can set a limit order that instructs their broker to purchase the stock at $27 per share. If the stock drops to $27 or lower, the limit order will be executed, and the investor will purchase the shares at their specified price.
ADSS offers a range of global markets for traders, with CFD opportunities in indices, commodities, forex, equities and more. We also feature tutorials, how-to guides, and weekly webinars to help you navigate the financial markets and find better trading opportunities. You can start trading and investing online by opening a live trading or demo trading account.