Limit order
a.k.a. Buy limit, Sell limit
An order to buy below the current price or sell above it, filled only if the market reaches your chosen price.
A limit order sets the worst price you will accept. A buy limit sits below the current price, waiting for a dip. A sell limit sits above, waiting for a pop.
If price never gets there, nothing happens. That patience is the point. A take-profit is really just a limit order that closes a trade.
Waiting for a dip
- EUR/USD is trading at 1.0850.
- You place a buy limit at 1.0820, near a support level.
- If price dips to 1.0820, you are filled. If not, no trade.
Bottom line: You only buy at your price, or not at all.
Confusing a buy limit with a buy stop. Limits wait for a better price; stops wait for confirmation in the direction of the move.
Keep this word for good
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