Buy Limit Order

AAA

DEFINITION of 'Buy Limit Order'

An order to purchase a security at or below a specified price. A buy limit order allows traders and investors to specify the price that they are willing to pay for a security, such as a stock. By using a buy limit order, the investor is guaranteed to pay that price or better, meaning that he or she will pay the specified price or less for the purchase of the security.


While the price is guaranteed, the filling of the order is not. In other words, if the specified price is never met, the order will not be filled and the investor may miss out on the trading opportunity.




INVESTOPEDIA EXPLAINS 'Buy Limit Order'

A buy limit order ensures that negative slippage will not occur - the buyer will not get a worse price than he or she expects. Buy limit orders provide investors and traders with a means of precisely entering a position. For example, a buy limit order can be put in for $2.40 when a stock is trading at $2.45. If the price dips to $2.40, the order will automatically be executed.

RELATED TERMS
  1. Limit Order

    An order placed with a brokerage to buy or sell a set number ...
  2. Limit Order Book

    A record of unexecuted limit orders maintained by the specialist. ...
  3. Market Order

    An order that an investor makes through a broker or brokerage ...
  4. Market If Touched - MIT

    A conditional order that becomes a market order when a security ...
  5. Order

    An investor's instructions to a broker or brokerage firm to purchase ...
  6. Stop Order

    An order to buy or sell a security when its price surpasses a ...
Related Articles
  1. The Basics Of The Bid-Ask Spread
    Investing Basics

    The Basics Of The Bid-Ask Spread

  2. Understanding Order Execution
    Investing Basics

    Understanding Order Execution

  3. A Look At Exit Strategies
    Active Trading Fundamentals

    A Look At Exit Strategies

  4. Tips For Investors In Volatile Markets
    Investing

    Tips For Investors In Volatile Markets

comments powered by Disqus
Hot Definitions
  1. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
  2. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  3. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  4. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  5. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  6. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
Trading Center