Limit Orders
A limit order specifies a price.
That price acts like a cap or floor:
- buy limit: do not pay more than this price
- sell limit: do not sell cheaper than this price
Two outcomes
A limit order can do one of two main things:
- **Rest on the book**
- **Cross the spread and execute immediately**
Resting example
If the best ask is 172.02 and you submit a buy limit at 171.90, your order does not cross.
It rests on the bid side as liquidity.
Crossing example
If the best ask is 172.02 and you submit a buy limit at 172.02 or above, your order crosses.
It can execute immediately against the resting ask.
Partial fills
If your order size is larger than the resting size at the top level:
- part may execute immediately
- the remainder may rest on the book at your limit price
Why limit orders matter
Limit orders are where the order book comes from.
Without resting limit orders, there is no visible liquidity structure to study.