See: Limit Order.
In general, limit orders describe a pre-set instruction to buy or sell a stock (or other asset) at a specific price. These are often used to prevent stocks or commodities (or whatever) from moving too far too fast.
You hold a stock at $50 a share. You suffer from narcolepsy and sometimes miss parts of the day with sudden sleeping spells. You want to be able to take profits in your stock if it reaches $55 a share.
So, you set a limit order at that price. If it gets to $55, your broker will automatically sell.
The concept also comes into play on an exchange-wide level. It's especially common on commodity exchanges. Many commodities have specific daily limits dictating how far their prices can move during a given session. If it rises by its daily limit, the commodity is said to "limit up."
See: Limit Move. See: Limit Down.
Related or Semi-related Video
Finance: What are Limit Order, Sell Limi...7 Views
Finance a la shmoop what is a limit order? you want to sell a thousand shares
of Colonel electric it was demoted after they cut their dividend the shares have [Scissors cuts dividend in half]
been trading wildly between $15 and $25 a share you don't want to feel like a
moron for having sold them at fifteen bucks when six weeks later they kissed
25 with tongue so what do you do well you put in a limit order that is you put
a limit of a minimum price of 25 bucks a share for Colonel Electric such that [Pile of stocks appear]
those shares will simply sit in your account unsold maybe forever until
somebody out in the wild blue yonder of Stockland is willing to pay twenty five [Woman standing at a colonel electric stand]
dollars or more for the shares where you have a minimum price limit of 25 bucks a
share in your order so here's to hoping they sell and don't get further demoted [Man carries stock into car]
Sargent Electric is just a place you don't want to go
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