A limit order is an instruction to buy or sell an asset at a specific price or better. A buy limit order can fill only at or below your limit price. A sell limit order can fill only at or above it. You decide the worst price you will accept. You do not get a promise that the trade happens: the US Securities and Exchange Commission puts it plainly, "A limit order is not guaranteed to execute."
How a limit order works
When you place a limit order, you set three things: the side (buy or sell), the quantity, and the limit price. What happens next depends on where your limit sits relative to the current market.
If the market is already at or better than your price
Suppose you place a buy limit above the lowest price sellers are currently asking. A seller is already willing to trade at your price or lower, so the order can fill straight away. That fill can come at a better price than your limit, because the rule is "your price or better", not "exactly your price". A sell limit placed below the highest current bid works the same way. Traders call this a marketable limit order.
If the market is not at your price yet
If your buy limit is below the current asking price, or your sell limit is above the current bid, the order waits in the venue's order book. It fills only if the market moves to your price and there is someone on the other side. FINRA says: "if the market price fails to match or better your limit price while your order remains active, it will not be executed."
Touching your price is not the same as filling
Most order books rank resting orders by price first, then by time. A survey of limit order book research by Gould, Porter and colleagues calls price-time priority "by far the most common priority mechanism". Among orders at the same price, the one submitted earliest is matched first. If the market trades at your limit only briefly, orders ahead of you in the queue can use up the available volume and leave yours unfilled. Some futures markets use pro-rata matching instead, splitting fills among orders at a price in proportion to their size.
Worked example (illustrative figures)
An asset trades at 100, with the best bid at 99.90 and the best ask at 100.10.
- Buy limit at 95. The order rests in the book. It fills only if sellers come down to 95 or lower and your place in the queue is reached. If the price bottoms at 95.50 and then rises, you never buy.
- Buy limit at 101. Sellers are already offering at 100.10, so the order can fill at once, at around 100.10 rather than 101, depending on how much volume sits at each price.
- Sell limit at 110. The order waits. It fills only if buyers bid 110 or higher.
The figures are hypothetical and only show the mechanics.
Limit order vs market order vs stop-limit order
| Order type | What you control | Main risk |
|---|---|---|
| Market order | Speed: it generally executes at or near the current bid or ask | The price can differ from the one you saw, especially in fast markets (FINRA) |
| Limit order | Price: your limit or better | It may never execute, or execute only in part |
| Stop order | A trigger price, after which it "automatically turns into a market order" (FINRA) | Once triggered, it can fill well away from the stop price |
| Stop-limit order | A trigger price that activates a limit order | After triggering, it may still not fill if the market moves past your limit |
Will your limit order fill now, wait, or expire?
Answer three questions about your order to see whether it can fill at once, rest in the order book, or be cancelled, and which time-in-force rule applies.
Where is your limit price compared with the current market?
- Buy limit at or above the best ask → next question
- Sell limit at or below the best bid → next question
- Buy limit below the best ask, or sell limit above the best bid → next question
Is there enough volume on the other side, up to your limit price, to cover your whole quantity?
- Yes → It can fill straight away
- No, or not sure → next question
Will you accept part of your quantity being filled?
- Yes, part now is fine → Part may fill now
- No: all of it at once, or nothing → Fill-or-kill fits this
- No, but the full order can wait → All-or-none fits this
How long should the order stay live?
- Only for the current trading day → It rests in the book for the day
- Until I cancel it → It rests until you cancel it or it expires
- Only right now → It is likely cancelled straight away
This is a marketable limit order. It fills at your limit or better, so a buy limit at 101 with sellers offering at 100.10 can fill at around 100.10, not 101.
Unless you choose FOK or AON, a limit order can be partly filled. The rest waits in the book or, with immediate-or-cancel, is cancelled. Your position may end up a different size than you planned.
With fill-or-kill, the whole order executes immediately or not at all.
All-or-none prevents partial fills. Unlike fill-or-kill, it can keep working until it is filled, cancelled or expired.
The order fills only if the market reaches your price and your place in the queue is reached. Touching your price is not the same as filling: earlier orders at the same price are matched first. A day order stays live only for the current trading day.
A good-til-canceled order stays open until you cancel it or the firm's expiry date, because firms usually cap how long these orders last. It can fill when you no longer expect it to, for example after news moves the price, so review open orders regularly.
Immediate-or-cancel fills as much as possible right away and cancels the rest. If no one on the other side is at your price yet, there may be nothing to fill.
This follows the US securities definitions used in the article. It cannot see a live order book or your place in the queue, and each venue sets its own rules on matching, time in force, minimum sizes and fees.
How long a limit order stays active (time in force)
A limit order also carries an instruction for how long it stays live. FINRA describes the common ones:
- Day order: the firm keeps trying to fill it during the current trading day.
- Good-til-canceled (GTC): stays open until you cancel it or until the firm's expiry date, since firms usually cap how long these orders last.
- Immediate-or-cancel (IOC): fills as much as possible right away, and the rest is cancelled.
- Fill-or-kill (FOK): the whole order executes immediately or not at all.
- All-or-none (AON): prevents partial fills but, unlike FOK, can keep working until filled, cancelled or expired.
Unless you pick FOK or AON, a limit order can be partly filled. You might buy part of the quantity at your price while the rest waits or is cancelled.
When a limit order is useful, and its costs
Limit orders suit situations where price matters more than speed: thinly traded assets with wide gaps between bid and ask, large orders that would otherwise move the price, or a plan to buy or sell only at a specific level.
The cost is uncertainty about execution. An order that never fills can mean missing a move entirely, and a partial fill can leave you with a position of a different size than you planned. A resting order can also fill when you no longer expect it to, for example after news moves the price sharply, so open orders need regular review.
Limit orders on crypto venues
Crypto trading venues that run an order book use the same basic logic: buy limits fill at or below the limit, sell limits at or above it, and resting orders wait in a queue. Each venue sets its own rules on matching, time-in-force options, minimum order sizes and fees, so read the venue's own documentation before relying on any of them. The SEC and FINRA material cited here describes US securities markets, not crypto venues.
Limitations: the definitions here come from US securities regulators and one academic survey, and individual trading venues may apply different matching and expiry rules.
