What is a Buy Limit Order?
A buy limit order allows investors to buy a stock at or below the price they set, giving them more control over how much they pay.
🤔 Understanding a buy limit order
A buy limit order lets investors buy shares at or below a specified price. That allows them to keep control over how much they pay. Investors give the order to a broker, who will only fill it if the share falls to the set price or below during the time the order is in place. This means that execution is not guaranteed, but if the stock price goes to or below your limit price and there are enough shares available, your order will be filled at or below your limit price.
Let’s say a buy limit order is set at $15 for a stock trading at $17. The order will be filled only if the price drops to $15 or below. Now, let’s say the order expires in two days, and the stock only falls to $16 on the first trading day. The order will not be “triggered.” But the next day, the price of the stock opens at $13. Then the investor should get shares at around $13, if that’s the first price available at or below $15.
Takeaway
A buy limit order is like setting a strict household budget, but for buying stocks…
You have a fixed amount of money to spend every month, so you can only buy things that fit within that budget. If your budget is $500 and that sofa you’ve been eyeing costs $600, you would only be able to buy it if the price drops by $100 or more.
The free stock offer is available to new users only, subject to the terms and conditions at rbnhd.co/freestock. Free stock chosen randomly from the program’s inventory. Securities trading is offered through Robinhood Financial LLC.
