What is a limit order?

A limit order is a type of order used when buying or selling securities, such as shares, depository receipts or bonds. A limit order allows you to set the price at which you are willing to buy or sell.

Buy order:

In a buy order, you specify the maximum price you are willing to pay when buying a security. When the market price of the security reaches this price, or falls below it, the buy order is executed. However, there may be cases when a buy order cannot be executed, for example:

• When the market price does not reach your specified price;
• When there are not enough securities available to (fully) execute your order. The (residual) order then remains until its expiry date.

Sell order:

In a sell order, you specify the minimum price you are willing to pay when selling a security. When the market price of the security reaches this price, or rises above it, the sell order is executed. However, there may be cases when a sell order cannot be executed, for example:

• When the market price does not reach your specified price;
• When there is not enough demand for securities at the price you specified. Your (residual) order then remains until its expiry date.

Limit orders, therefore, allow you to set the price you at which you want to buy or sell. However, it is important to note that execution of a limit order depends on market conditions and availability of counterparties willing to trade at the price you specified.