Significance

Investors use buy limit orders to avoid spending more than they want for a fast-moving stock. With a market order, you can order a buy only to find that the stock price skyrocketed in the lag time between your order and the actual execution of the buy. This happens quite often with initial public offerings. Buy limit orders also are used by investors looking for a good deal on a stock. The investor places a limit order for the desired price and waits for the price to drop. Investors use sell limit orders to prevent their stocks from selling below a desired price.

Number of Shares

Your stockbroker or brokerage service will always try to buy or sell the specified number of shares in your limit order, but this is not always possible, especially if your limit order is for a large number of shares. Investors can prevent their limit order from being split by designating it as a fill or kill order. This requires all the shares in your limit order to be bought or sold, or the limit order is canceled. You would then have to place your limit order again if you want the same terms. Investors also can designate limit orders as all or none. This prevents the limit order from being split but keeps the limit order active in case the stock price reaches your limit order price again. Keeping your entire order intact saves on fees. A split order can be treated as two different transactions.

Misconceptions

Just because you place a limit order to buy or sell a stock at a specified price, it does not mean you will get the stock at that price. It may simply never get to that price, so your order sits unfilled indefinitely. If the stock is extremely volatile, the price can fluctuate so quickly that there is not enough time to fill your limit order before the price returns to an unacceptable level.

Considerations

References

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Market Order Vs. Limit Order Stocks

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