Orders & execution
How does a Limit Order guarantee price protection at the cost of execution certainty?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
A limit order guarantees that a trade executes only at a specified price or better, protecting against unfavorable fills but risking that the order never executes if the market doesn't reach that price.
How it works
Limit orders rest on the order book until matched or canceled. They are especially useful in volatile or illiquid stocks where price certainty matters more than guaranteed execution.
An example
A trader sets a limit buy order at $50 on a stock trading at $51; the order only fills if the price drops to $50 or lower.
Risk & limitations
In fast markets, a limit order may never fill if the price moves away quickly, potentially causing a trader to miss an intended entry or exit.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.