Limit Price

Categories: Investing and Trading, Brokerages,

A limit price is the specific price at which you tell your stockbroker to execute a buy or sell order on a particular security. If the transaction can be completed at that price, it goes through, but if that price is not available, no purchase or sale takes place. The advantage of a limit order is that you won't pay more or sell for less than you want. Since your broker is monitoring the price, it is more likely that the trade will take place at the limit price than if you waited until the security reached that price to place your order. The potential drawback of setting a limit price, which is also known as giving a limit order, is that the transaction may not take place in a fast market if the price of the security moves up or down quickly, passing the limit price.