A limit order is an order to buy or sell a security at a specified price or better. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher.

Limit orders are not guaranteed to execute.

A limit order may also be referred to as a “contingent” order because it depends on another order, usually a market order, to execute first. For example, if you place a buy limit order for XYZ stock at $10 per share and it is currently trading at $11 per share, your order will not execute until the stock price drops to $10 per share or lower.

If you want your limit order to execute immediately, you can place what’s called an “all-or-none” (AON) limit order. This type of limit order will only be executed if all of the shares you’ve requested can be purchased at your specified price or better.

If even one share is unavailable at your requested price, your entire order will be canceled.

Another type of limit order is a “fill-or-kill” (FOK) limit order. This type of order must be executed immediately in its entirety, or it will be canceled.

FOK orders are typically used in fast-moving markets where there is little room for error.

It’s important to remember that just because you place a limit order doesn’t mean it will necessarily be executed. If the security you’re trying to buy or sell isn’t trading at your specified price, your order will just sit in the market until it’s either filled or canceled.

A limit order can be a great way to get the best possible price when buying or selling securities, but it’s important to know that there’s no guarantee your trade will execute.