4.12What is a limit order?
1What is it?
A limit order buys or sells only at your chosen price or better.
2Why does it exist?
It gives you price control. A limit buy at ₹1,495 will never pay more than ₹1,495.
3Stock market example
Suppose a stock trades at ₹1,500 (hypothetical). You place a limit buy at ₹1,490. If the price dips to ₹1,490, your order fills. If it never does, it stays pending until the end of the day (then cancels).
4Diagram
5Advantages
- ✓Price control.
- ✓No slippage beyond your limit.
6Risks
- May never fill if the price doesn’t reach your limit.
7Quick revision
- Fills at your price or better.
- May not fill.
- Preferred by careful investors.
8Knowledge check
Q1. Limit sell at ₹520 when the price is ₹510. When does it fill?Show answer
Only if the price reaches ₹520 or higher.
Q2. Can a limit buy fill at a lower price than your limit?Show answer
Yes, "or better" means lower for buys.
Q3. Main downside of limit orders?Show answer
They might not fill.
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