What is a limit order? 🤔
Limit orders are a tool in your trading toolkit to give you more control over the price you pay for a stock. Limit orders can essentially "limit" the price you pay to buy a stock, or the price you receive for selling one.
They allow you to choose the price you want to buy a stock at or sell it for. Unlike a market order (that buys or sells a stock at the best available price) a limit order only happens if the price is at - or better than - a price you set.
For example, if you owned shares in a company that were worth $200 per share, you might want to sell them if the share price increases in value to $250 by setting a sell limit order at that share price.
Why do investors use limit orders? đź’¸
Investors typically use a buy limit order if they feel the market is overvaluing the stock — where they’re hoping to buy at a better (lower) price.
A buy limit Orders can help prevent you from getting a market order at a price you weren’t expecting.
Doing this can also give you more certainty about your purchase price if a stock is volatile — rising and falling quickly. A buy limit order could prevent you from getting a market order at a price you weren't expecting.
A sell limit order allows you to specify the price that you’re willing to sell a stock for, which some investors prefer.
You asked, we answered âś…
We’ve been live for a few months now, and a lot of our early customers have been great at giving us feedback on what they like, don’t like and want to see more of.
Limit orders was our most requested new feature, so we really hope you enjoy it!
As always, if you have ideas or feature requests we love to hear from you, so drop us an email to hello@lightyear.com and we’ll take it from there.
Remember, when investing your capital is at risk. Limit orders are not guaranteed. They will only execute at the given price or better. Your trade will only go through if a stock reaches or improves upon the set limit price for long enough to be executed. If it never reaches that price, or there is no trade volume available at that price, the order won't execute.
Jani Kiilunen is a seasoned product manager with extensive expertise in consumer products and finance. Beyond product, Jani is an avid investor with a strong passion for empowering others to optimize their financial well-being.
