Limit orders are pending orders that execute at a specified price or better. They give traders precise control over entry prices.
Buy Limit Order
- Placed below the current market price
- Executes when price drops to the limit level
- Used when expecting a bounce from support
Example: EUR/USD is at 1.0850. You set a buy limit at 1.0800, expecting a pullback.
Sell Limit Order
- Placed above the current market price
- Executes when price rises to the limit level
- Used when expecting a reversal from resistance
Example: GBP/USD is at 1.2650. You set a sell limit at 1.2700, expecting a rejection.
Buy Stop / Sell Stop (Comparison)
| Order | Placement | Trigger | Use Case |
|---|---|---|---|
| Buy Limit | Below price | Price drops | Buy at support |
| Sell Limit | Above price | Price rises | Sell at resistance |
| Buy Stop | Above price | Price rises | Breakout entry |
| Sell Stop | Below price | Price drops | Breakdown entry |
Key Points
- Limit orders guarantee your price (or better)
- They are not guaranteed to fill if price doesn’t reach the level
- Good for patient, planned entries