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Answer:
A LIMIT ORDER, also known as an "OR BETTER" order is a type of buy or sell order. It is a very commonly used Order Type.
A Limit Orders key feature is that you are NOT guaranteed a fill, but if filled you are guaranteed a price.
For example, you might place an order to BUY IBM at "$25 or better", (You can also say Buy IBM at $25Limit, it means the same thing). You are instructing the broker to BUY you IBM at a price of $25 or less. Note that if IBM never trades 25 your order will be canceled at the end of the day*.
On the Sell side, "Or better" is more. So for example, Sell IBM at $25LIMIT means get me $25 or more. So you will wind up with $25 or more IF you are filled, but if the opportunity does not occur in the market that day, the order will be canceled at the days end* and you will still have your IBM.
*All orders are DAY ORDERS, meaning one day, unless otherwise specified. The most common specification is the acronym GTC (Good 'til Canceled.)
A Limit Orders key feature is that you are NOT guaranteed a fill, but if filled you are guaranteed a price.
For example, you might place an order to BUY IBM at "$25 or better", (You can also say Buy IBM at $25Limit, it means the same thing). You are instructing the broker to BUY you IBM at a price of $25 or less. Note that if IBM never trades 25 your order will be canceled at the end of the day*.
On the Sell side, "Or better" is more. So for example, Sell IBM at $25LIMIT means get me $25 or more. So you will wind up with $25 or more IF you are filled, but if the opportunity does not occur in the market that day, the order will be canceled at the days end* and you will still have your IBM.
*All orders are DAY ORDERS, meaning one day, unless otherwise specified. The most common specification is the acronym GTC (Good 'til Canceled.)
Contributor:
John
John
First answer by John Taddeo.
Last edit by John Taddeo.
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