A limit order is an instruction to buy or sell only at a specified price or better.

A limit order is an instruction to buy or sell only at a specified price or better. It rests in the order book until it is executed, canceled, or expires. This gives the trader control over the execution price, but it does not guarantee that any trade will occur.

For a buy limit order, execution can occur only at the limit price or lower. For a sell limit order, execution can occur only at the limit price or higher. If the market does not reach a price that satisfies the limit, the order can remain unfilled. That is the core trade-off: a limit order prioritizes price control over execution certainty.

In market structure terms, a resting limit order supplies liquidity to the book. Whether it fills depends on later order flow reaching that quoted price. If opposing interest arrives in sufficient size, the order may execute fully. If only part of the order is matched, it may execute partially and the remainder can continue resting. If the market moves away without trading at the limit, the order may not execute at all.

This mechanism matters for systematic trading because signal generation and execution are separate problems. A strategy may identify an attractive entry or exit level, but a limit order adds a conditional execution layer: the trade occurs only if the market trades at the chosen price. In backtesting, that means the model must represent order placement, queueing assumptions, partial fills, cancellations, and non-execution. Otherwise, the simulated results can overstate implementability.

Within the supported scope, the plain definition remains: a limit order is a priced instruction that rests at a chosen level and may execute only at that price or better. Its benefit is price control. Its cost is reduced certainty of execution.

Covered in depth in the Cross-venue market data & signals pillar hub.