A Limit Order gives traders control over the price at which their trade is executed. Instead of accepting the current market price, the trader sets a specific price level. The order is only filled when the market reaches this level or offers a more favorable price.

For a buy limit order, the trade will only be executed at the limit price or lower. This is useful when a trader wants to enter a position below the current market price. For a sell limit order, the trade will be executed at the limit price or higher. This helps secure profits by selling at a preferred price point.

Limit Orders are not guaranteed to execute. If the market never reaches the specified price, the order remains open. This can be an advantage or a drawback depending on the strategy. Traders who prioritize price over speed often use Limit Orders to avoid slippage and protect their entry or exit levels.

This order type is especially useful during periods of market volatility or low liquidity. It is commonly used in stock, forex, and crypto markets.