Understanding the 'Limit' in Limit Orders

A limit order is an instruction to your broker to buy or sell a security only at a specific price or better. For instance, if you want to buy $TOP but only if it drops to 11.00, you'd place a limit buy order at 11.00; it won't execute if the price stays above that level. This contrasts with a market order, which buys or sells immediately at the best available current price, regardless of how much that might be. Knowing the difference between limit and market orders is critical for controlling your entry and exit points, especially in volatile markets.