Glossary

A limit order is a type of order placed by an investor to buy or sell a security at a specific price or better. 📈

Unlike a market order, which executes at the current market price, a limit order allows an investor to set the maximum price they're willing to pay when buying or the minimum price they're willing to accept when selling.

For example, if a stock is trading at $50 and an investor wants to buy it for no more than $48, they can place a limit order at $48. The order will only be executed if the stock's price falls to $48 or below.

Fun fact: Limit orders can help investors avoid "slippage" 🏄‍♂️ which occurs when the price of a security changes between the time an order is placed and when it's executed. By setting a specific price, investors can have more control over the cost of their transactions.