What is a Limit Price?

Buying and selling stocks is a respected form of gambling, many people think. You the stockholder never really know for sure whether that hot stock that you buy is going to go up or down. You can be reasonably certain of the direction of its share price, based on market indicators or, in some cases, inside knowledge. Indeed, a large number of people buy stock knowing full well what is going to happen in the short run. Long-run behaviors, however, are much more difficult to predict. Many investors have a target level for the price of a stock when they decide to buy or sell. For example, you might arrive at the figure of $50 a share, which is all you want to spend on a certain stock. Once you decide that you won’t buy if the share goes above $50, then you have set $50 as your limit price for that stock. Especially if you have a limited amount of money to spend, setting a limit price is a good idea. The limit price is not just for you, though. It is, most importantly, for the broker or ...  more

You can add a Limit price to a trade and if the price is beyond this limit when the transaction actually goes through, then it will fail. You can use it to safeguard against sudden price changes.  more