Limit order
An instruction to trade only at a price you specify, or better.
A market order says 'buy now, at whatever the price is'. A limit order says 'buy, but not above this price'. The first guarantees execution; the second guarantees price.
In a fast-moving or illiquid market, a market order can fill at a price that will genuinely shock you. The limit order is the adult choice almost everywhere.
The fee you never see
You buy at the ask and sell at the bid, so you are down the spread the instant you trade. In an illiquid stock it dwarfs any commission you thought you were avoiding.
It is the simplest protection against paying far more than you intended.
Using market orders in illiquid stocks, or in the first minutes after the open when spreads are widest.
Related terms
See Limit order on a real company
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