How To Place A Limit Order 14 Steps With Pictures

In other words, a limit order guarantees the trade price or better, but not that the trade will occur. This separates limit orders from market orders, in which the order will most likely be filled (assuming decent trading volume) but the price that it is filled at may vary. [1] X Research source

For example, imagine that you own a number of shares of X. You bought X at $50 per share and are hoping to sell when X reaches $55. You can set a limit order for $55 that will activate as soon as the stock reaches this price, assuming your broker is able to find a buyer for your stock. Setting this limit order protects you from selling your shares of X at any market price lower than $55 or from missing your opportunity to sell at your desired price point of $55 in case the stock goes down again.

For example, suppose you had previously bought 500 shares of INTC at $20. 00 per share, so you had invested $10,000, plus commissions. You now want to sell the stock if the price rises to at least $25. 00 per share. To do this you would place an order with your broker to sell 500 shares of INTC at a limit of $25. 00. If the stock price reaches $25. 00 and there is a buyer, the broker would execute your order and you would receive $12,500 (or more if your broker is able to get an even better price), less commissions and fees. Your net before commissions, fees, and taxes would be $12,500 minus $10,000 (your original investment), or $2,500. However, if the stock price does not reach $25. 00 per share the order would not be executed.

For example, suppose you wanted to buy 500 shares of JCP if the stock dropped to $19. 50 per share. In this case you would be ready to invest $9,750 plus commissions. You would place an order with your broker to buy 500 shares of JCP at a limit of $19. 50. If the stock price drops to $19. 50 per share (or less) and there is a seller, your broker would execute your order.

A stop-limit order combines this type of order with a limit order by securing a limit for filling your stop-loss order. For example, you might place a sell stop-limit order to have a stop price at $30 and a limit at $25. This means that when the price of the security drops below $30, a market order is entered to sell your position. However, this order will go unfilled if the price drops below $25 below your shares can be sold. [6] X Research source

Check with your broker to be sure how many decimal places he uses in determining limit and security prices.