Buy limit

A buy limit is a pending order placed below the current ask price. It sits on the platform until the ask falls to your level, then fills at that price or better. If the market never comes down that far, the order is never filled.

The logic is "I want to buy, but only if it gets cheaper". Traders use it to enter long positions near a support level or after a pullback in an uptrend, rather than chasing the current price.

Example

Illustrative figures: EUR/USD is trading at 1.0880 / 1.0881. You place a buy limit at 1.0850 with a stop-loss at 1.0820 and a take-profit at 1.0940.

• If the ask drops to 1.0850, the order fills there (or slightly better if the price jumps through it).
• Your risk is 30 pips and your target is 90 pips.
• If the price turns at 1.0855 and rallies without touching 1.0850, nothing happens: you miss the move but lose nothing.

Common mistakes

• Confusing it with a buy stop. A buy stop sits above the market and fills when price rises to it. A buy limit sits below and fills when price falls to it. Most platforms reject an order placed on the wrong side.
• Forgetting the spread. Buy orders fill at the ask. On a chart that shows bid prices, a candle can appear to touch your level while the ask never quite reached it.
• Leaving it unattended. A pending order can fill during a news spike hours after you placed it, when the reason for the trade has changed.

The opposite order is the sell limit, and the buy stop covers the breakout case. Our guide to order types compares them all.