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Finance Glossary

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Buy Limit Order


You want to buy a stock or other security but you're on a budget. You don't want to get fleeced. So you put in a buy limit order. This means that your broker or trader will only buy your stock at or below a certain price. You won't overspend and have to put off that vacation to Maui. 


You want to buy MSFT at $24 or better. The stock is currently trading at $24.12. So you wait. And wait. And you wonder, "will this trade ever happen?" (It may not.) But then there's a big market down-draft day and the stock kisses $23.99 for 20 seconds. If your broker is good, he'll pass along that extra penny to you, i.e., buy the shares for a total cost of $23.99 to you, not $24. But at worst, you'd pay $24.