Limit Order
An order to buy or sell a security at a specified price or better, giving the trader control over execution price but no guarantee of execution.
What is Limit Order?
A limit order is an instruction to a broker to buy or sell a security only at a specified price or a more favorable one. A buy limit order executes at the limit price or lower; a sell limit order executes at the limit price or higher. Limit orders guarantee a price floor or ceiling but do not guarantee that the order will be filled — if the market price never reaches the limit, the order expires unfilled. Limit orders are particularly useful for thinly traded securities with wide bid-ask spreads, illiquid after-hours markets, or when a trader wants to avoid slippage. They contrast with market orders, which execute immediately at the best available price.
Example
An investor wants to buy Amazon shares but only if the price falls to $175 from its current $185. She places a buy limit order at $175. If Amazon drops to $175 or below during the trading day, her order executes. If Amazon stays above $175, her order expires at the end of the day unfilled. She avoids paying more than her target but risks missing the position entirely if the stock never reaches her price.
Source: Investopedia — Limit Order