A limit order is an order to buy a security at not more, or sell at not less, than a specific price. This gives client the control over the price at which the trade is executed; however, the order may not be executed if there is no matching order found at the exchange throughout the day.

Limit orders can be used when the you wish to control the execution price rather than certainty of execution of the order. A buy limit order can only be executed at the limit price or lower.

Example, if you want to buy shares of Axis Bank, but do not want to pay more than Rs. 1100 for it, you can place a limit order to buy the share with a limit price of Rs.1100.

By entering a limit order, you will not buy the stock at a higher price. Similarly a sell limit order can be executed only at the limit price or any price higher.