<p>A <strong>Limit Order</strong> is a type of trading instruction that tells a broker to buy an asset only at a price lower than the current market level or sell it only at a price higher than the current market level. Unlike a <strong>Market Order</strong>, which executes immediately at the best available price, a limit order waits for the market to reach the trader‑specified price before being filled. This gives traders control over entry or exit points, especially in volatile conditions where prices can move quickly. The order remains active until it is either executed, cancelled by the trader, or expires according to the broker’s time‑in‑force rules.</p>

<h2>How It Works</h2>
<p>When a trader submits a limit order, the platform records the desired price and the quantity of the instrument. The order sits in the broker’s order book, visible to other market participants if the broker uses an STP/NDD model like <strong>STB Provider</strong>. If the market price touches or improves upon the limit price, the order is triggered and filled at that price or better. For a buy limit, the execution price will be the limit price or lower; for a sell limit, it will be the limit price or higher. If the market never reaches the limit, the order stays open. Traders can set the order to be good‑for‑day (GFD), good‑till‑cancelled (GTC), or tied to a specific date.</p>

<p>On platforms such as <strong>MetaTrader 5</strong>, limit orders are placed through the New Order window by selecting “Buy Limit” or “Sell Limit” and entering the price level. The platform then monitors the bid/ask feed and automatically submits the order when conditions are met.</p>

<h2>Why It Matters for Traders</h2>
<p>Limit orders help traders avoid slippage, which occurs when a <a href="/NewSite/encyclopedia/market-order/" class="ency-link">market order</a> fills at a less favourable price due to rapid price movement. By specifying a price, traders ensure they do not pay more than intended when buying or receive less than intended when selling. This is particularly useful for:</p>
<ul>
<li>Entering positions during pullbacks or retracements.</li>
<li>Taking profits at predefined target levels.</li>
<li>Managing risk by setting stop‑loss equivalents on the opposite side of a trade.</li>
</ul>
<p>Because the order only executes when the market meets the condition, traders can step away from the screen without worrying about unwanted fills. However, there is a trade‑off: if the price never reaches the limit, the opportunity may be missed.</p>

<h2>Example</h2>
<table>
<tr><th>Scenario</th><th>Details</th></tr>
<tr><td>Asset</td><td>EUR/USD</td></tr>
<tr><td>Current price</td><td>1.0850</td></tr>
<tr><td>Trader action</td><td>Buy limit at 1.0820</td></tr>
<tr><td>Outcome if price drops to 1.0820</td><td>Order fills at 1.0820 or better (e.g., 1.0818)</td></tr>
<tr><td>Outcome if price stays above 1.0820</td><td>Order remains unfilled; trader may adjust or cancel</td></tr>
</table>

<h2>Key Takeaways</h2>
<ul>
<li>A <strong>Limit Order</strong> executes only at a specified price or better, giving precise control over trade entry and exit.</li>
<li>It protects against slippage but may result in missed opportunities if the market does not reach the limit price.</li>
<li>Commonly used on platforms like <strong>MetaTrader 5</strong> and offered by brokers such as <strong>STB Provider</strong> for both short‑term and long‑term strategies.</li>
<li>Traders often combine limit orders with stop‑loss and take‑profit levels to create a complete risk‑management framework.</li>
</ul>