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| Definitions by InvestorWords.com |
| What is...? |
| limit price Maximum or minimum price for which you will buy or sell a stock. In contrast to market orders, which guarantee an execution, but not a price, limit orders allow you to set the price-either the maximum amount you're willing to pay (for a buy order), or the minimum amount you're willing to receive (for a sell order). Of course, if the stock is selling higher than your limit sell order, you'll be filled at that price. If the stock's ask price is lower than your limit buy order, it'll be filled at the lower price. For example, let's say XYZ's current ask price is 53. You place an order to buy at 50. If and when the price falls to 50, your order will fill at 50. If you had placed a limit order to buy at 53 or above, you would have been filled at 53 (unless the price had moved up by the time your order came up in turn to be executed). |
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