Limit - LMT
This order is typically used for orders placed with a "Limit Price". The Limit Price is always the worst price at which an investor is prepared to execute a trade. For a buy order, the Limit Price is the highest price at which an investor is willing to buy a given security. Conversely, the Limit Price for a sell order is the lowest price at which an investor is willing to complete the sale of a specific security.
A limit order is the most frequently used order!
Example of use:
As opposed to a "Market" order, the investor is assured that the order will not be realized at a price that is less than the Limit Price.
For a buy order, the order will be realized at the Limit Price entered for the best offer on the market and in the worst case at the defined "Limit Price" - never at a worse price!
For a sell order with a Limit Price, the trade can be realized at the best bid on the market but in the worst case at the defined "Limit Price" - never at a worse price!
Placing an order:
An investor wants to buy a security at USD 9.50 at the worst. In the buy order window the Limit Price of USD 9.50 is entered into "Price (USD)". With regards to the given offers, this order cannot be completed immediately and the investor's order is then positioned with the Limit Price entered into the bids. If an offer comes on the market that matches this Limit Price or is better, the order will be satisfied and it is removed from the the depth of the market. If the quantity requested by an investor is higher than can be settled by the current offer, the corresponding portion of the offer is settled and the remainder stays at the depth of the market until settled or the order expires.
ORDER PARAMETERS:
Direction: Buy
Limit Price: USD 9.50
Quantity: 500 shares
Before order is placed:
| Price (USD) | Cumulative number of shares | |
| 10.23 | 7000 | Offer |
| 10.22 | 4,000 | |
| 10.20 | 2,000 | |
| 10.10 | 1,500 | |
| 10.00 | 1,000 | |
| Middle | ||
| 9.45 | 900 | Bid |
| 9.38 | 1,500 | |
| 9.30 | 2,200 | |
| 9.25 | 2,500 | |
| 9.20 | 5000 |
After order is placed:
| Price (USD) | Cumulative number of shares | |
| 10.23 | 7,000 | Offer |
| 10.22 | 4,000 | |
| 10.20 | 2,000 | |
| 10.10 | 1,500 | |
| 10.00 | 1,000 | |
| Middle | ||
| 9.50 | 500 | Bid |
| 9.45 | 1,400 | |
| 9.38 | 2,000 | |
| 9.30 | 2,700 | |
| 9.25 | 3,000 |
Order appears at the depth of the market - waiting for an appropriate offer.
After trade is completed:
| Price (USD) | Cumulative number of shares | |
| 10.23 | 7,000 | Offer |
| 10.22 | 4,000 | |
| 10.20 | 2,000 | |
| 10.10 | 1,500 | |
| 10.00 | 1,000 | |
| Middle | ||
| 9.45 | 400 | Bid |
| 9.38 | 1,000 | |
| 9.30 | 1,700 | |
| 9.25 | 2,000 | |
| 9.22 | 5,000 |
Offer of 1000 shares at USD 9.30 is placed on the market. The order is settled with a bid of 500 shares at USD 9.50 and 500 at USD 9.45.
