See: Limit Order.
Limit orders represent pre-set instructions to buy or sell an asset trading on an exchange...a stock or commodity, usually.
AAPL is trading at $190. If it reaches $185, you think it's a good deal. So you set a limit order to buy 1,000 shares at $185 a share.
If the stock goes up, the limit order never goes into effect. If it only drops to $187, the order still doesn't execute. But a drop to $185 and your broker will automatically close the deal.
The Limit Order Information System keeps a tab on all these potential orders. It's an electronic system that market specialists use to track the stock market. The LOIS helps them find the best prices on the various exchanges.
Related or Semi-related Video
Finance: What are Limit Order, Sell Limi...4 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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