Buy Limit Order

A Buy Limit Order is a type of order to purchase a security at or below a specified price. This order is executed only if the market price reaches the limit price set by the trader. It allows traders to buy assets at a favorable price rather than the current market price.

Example: If a trader places a Buy Limit Order for 100 shares of a Stock at $50, the order will only be executed if the stock’s price falls to $50 or lower.

Case 1: A trader believes that a stock currently trading at $60 will drop to $50. They place a Buy Limit Order at $50. If the stock price decreases to $50, the order is executed, and they buy the shares at that price. If the price never drops to $50, the order remains unfilled.

Case 2: A trader wants to purchase a stock currently priced at $70. They set a Buy Limit Order at $65. If the stock’s price declines to $65, the order is triggered, and the shares are bought. If the stock price remains above $65, the order will not be executed.