An order that stipulates the price limits within which a market transaction can be executed. A buy limit order can only be executed at the limit price or lower, a sell limit order at the limit price or higher. The disadvantage is that it may never be executed as market prices may rapidly exceed the limit before it can be filled. But it can help to protect an investor from buying at too high a price or selling too cheaply. Some brokers may charge more for executing a limit order than a market order. Limit orders are normally valid for a certain time specified by the client. They can also be Good Till Cancelled (GTC), remaining valid until the limit is reached and the order is executed or until the order is cancelled.
See also: Stop Loss Order