Limit order
A limit order buys or sells only at a set price or better. It guarantees the price but not that the order fills.
How Limit order is calculated
A buy limit rests in the order book at your price. It fills only if sellers come down to it, and orders at the same price ahead of you fill first. If price never reaches the limit, or touches it without enough volume for your place in the queue, there is no fill.
How it is read
It suits patient entries and exits, and it avoids paying the spread. The cost is the risk of missing the trade entirely.
Common mistakes
- Assuming price touching your limit means you were filled.
- Chasing the market by raising the limit again and again.
- Backtesting limit fills as certain, which flatters the result.
What Tickfloor tested
Tickfloor has not published a backtest of a rule built only on Limit order. It describes or manages something rather than giving a signal, so there is no strategy to score. It still shapes how any tested rule should be read.
Lessons that cover it
Related concepts
General information only. It doesn't consider your objectives, finances or needs. Tickfloor holds no financial services licence and never places trades.