Order types
Limit order
A limit order sets your maximum buy price (or minimum sell price). You control the price, not the certainty of a fill.
A limit order sets your maximum buy price (or minimum sell price). You control the price, not the certainty of a fill.
With a limit order you say "buy at $49.50 or less" (or "sell at $50.50 or more"). The order only fills if the market reaches your price. So you are sure of the price, but not of being filled: if the market never comes to your level, nothing happens.
It is the tool for entering with precision and avoiding slippage. Many active traders work almost entirely with limit orders to control their entry and exit prices.
The stock trades at $50.00 but you refuse to pay more than $49.50. You place a limit order at $49.50. If it dips to that price you get filled; otherwise your order waits.
Understanding a term is good. Applying it on a real platform with a clear method is better. That is exactly what we do in 5 days.