Limit orders, stop losses and other order types

A limit order is an instruction you give to buy or sell an asset at a specific price¹. It sets a price above which you will not buy, or below which you will not sell a stock². The instruction is usually given to a broker, which carries out the trade automatically at the price you specified¹.

The point of it is price control, not certainty. When the price hits your limit, your order is processed at your limit price or better². But a platform cannot guarantee that your limit order will be executed, even if the share price reaches your limit⁴. If the price never arrives, the order sits pending until it hits your limit again, expires, or you cancel it².

Limit orders are one of a small family of order types. Alongside them sit stop losses, which are designed to limit losses rather than set a buying or selling price, and recurring orders, which repeat on a schedule⁵. This page covers what each does, how long a limit order lasts, where it can fail, and what to do when something goes wrong.

A limit order sets the price you will buy or sell at

The definition is narrow and worth reading twice: a limit order is an instruction you give to buy or sell an asset at a specific price¹. It is not a promise that a deal will happen. It is a boundary on the price you are willing to accept.

Investors generally set limit orders to buy an asset at a low price or sell an asset at a high price¹. That is the whole logic. If you want to buy a share and you are not prepared to pay more than a certain amount, a limit order enforces that. If you hold a share and you are not prepared to sell below a certain amount, a limit order enforces that too.

The same rule is described by providers in slightly different words, which is useful because it shows the two directions. One describes a limit order as setting a price above which you will not buy, or below which you will not sell a stock². Another puts it as: the platform will buy or sell your shares, but only when the price reaches your set trigger or limit, and the trade will cancel if it cannot get your limit price or better⁸.

That last point matters. A limit order is not a queue position that waits indefinitely at any price. It is conditional on the market offering your price or better.

How a limit order is triggered and carried out

Once you have set your price, the order sits with your broker. The instruction is usually given to a broker that will automatically execute the trade at the price you specified¹. You do not have to watch the market or place the deal yourself when the moment comes.

When the price hits your limit, your order is processed at your limit price or better². So a buy limit set below the market can deal at your price or lower, and a sell limit set above the market can deal at your price or higher. The limit is the worst price you accept, not the price you are guaranteed to receive.

If the price moves away from your limit before your order is reached, the order does not simply vanish. If the price changes unfavourably, your order goes back to pending until the price hits your limit again, expires, or you cancel it².

Orders are also handled in sequence. One platform states that all orders will be executed in the order we receive them⁴. Where several orders sit at the same price, the one placed first is dealt with first.

Limit orders can expire: up to 90 days

A limit order does not last forever unless you keep renewing it. At one platform, limit orders expire at the end of the day you select your order to end on, which can be any trading date up to 90 days from when you submit your order⁶. The same provider states elsewhere that limit orders can stay active for up to 90 trading days⁹, and in its dealing FAQ that limit orders expire at the end of the day you select your order to end on, which can be any trading date up to 90 days from submission¹⁰.

Another platform describes the same outer limit in calendar terms: a limit order can be kept in place for up to 90 calendar days⁷.

The practical difference between 90 trading days and 90 calendar days is small but real. Trading days exclude weekends and market holidays, so 90 trading days stretches further into the calendar than 90 calendar days does. If you are setting an order to run to its maximum, it is worth knowing which measure your platform uses.

The expiry date is something you choose when you place the order, not something the platform decides for you. If your order lapses without dealing, nothing has been bought or sold and no dealing charge arises on it.

Where a limit order may not go through

A limit order can fail to deal for reasons that have nothing to do with your price being wrong. The most important is that execution is not guaranteed. One platform states plainly that it cannot guarantee that your stop loss or limit order will be executed, even if the share price reaches your limit⁴.

There are also structural limits on where limit orders can be used at all. One platform states that it is unable to process US shares via limit order for both buy and sell instructions¹¹. Another says that because you cannot set up stop loss or limit orders for international shares, you can only trade during international market hours¹³. If your investing is mostly in overseas shares, this changes what order types are available to you at all.

Timing is a further constraint. One platform states that limit orders and stop loss orders can be executed only during normal market hours⁴. Another says it offers real-time dealing throughout the trading day with limit orders available when markets are closed¹⁴. Both can be true of different platforms: placing an order outside market hours is not the same as having it carried out then.

Corporate actions and suspensions can also intervene. In the event of a corporate action or stock suspension, one platform states that it may, but is not obliged to, cancel your pending limit order⁴. If a company is taken over, reorganised or suspended from trading, an order you placed may not survive in the form you set it.

Finally, if the criteria for the order are not met, the limit order or stop loss order will be cancelled in full⁴. Partial fills are not the norm described here: the order either meets its conditions or it does not.

Placing, changing or cancelling a limit order

The mechanics of managing an order are usually straightforward, and the same principles apply across platforms.

1. Decide the price. For a buy, that is the highest price you will pay. For a sell, it is the lowest price you will accept².
2. Decide the end date. This can be any trading date up to 90 days from submission at one platform⁶, or up to 90 calendar days at another⁷.
3. Place the order through your platform's dealing screen.
4. Watch for the outcome. If the price hits your limit, the order is processed at your limit price or better². If it does not, the order returns to pending until the price hits your limit again, expires, or you cancel it².
5. Cancel or replace it if your plans change. An order that has not dealt can be cancelled before it expires.

One disclosure point is worth knowing before you use the service. One platform states that by choosing to use its online limit order service you agree that it will not disclose or publish details of unexecuted limit orders⁴. In other words, an order sitting in the market at a price that has not been reached is not visible to other participants through that platform.

Risks of buying and selling shares with orders

An order type controls the price you deal at. It does not control anything else about investing, and it does not remove the risks of holding shares.

The first risk is that the order never deals. If the price never reaches your limit, nothing happens. You keep your cash or your shares, but you also miss whatever the market did in the meantime. A buy limit set too low can mean watching a share rise without you.

The second is that a deal at your price is not a good deal in itself. A limit order is used to reduce losses, as opposed to being a tool for making money¹. It is a discipline on price, not a judgement about value.

The third is liquidity. Shares in smaller companies are harder to buy and sell, or less liquid, which increases risk as fund managers could be forced to sell at a lower price than they would like, or experience restricted trading¹⁵. A limit order does not create buyers or sellers where there are none.

The fourth is that selling and rebuying has its own costs. If you sell shares held in an ISA and later repurchase them, you may not be able to repurchase the exact number of shares sold as the price can fluctuate, and you may be charged trading fees and stamp duty on the repurchase¹⁶.

There is also the risk of oversubscription in new issues. If a company receives more applications for shares than are on offer, it can reduce the number of shares it allocates to each applicant¹⁷. An order for a new issue is not a guarantee of the full amount.

Stop losses and other order types

A limit order is one of several order types a platform may offer. The main ones sit alongside each other.

The distinction between a limit order and a stop loss is the direction of travel. A limit order is about the price you will accept. A stop loss is about getting out when a position moves against you. Both are subject to the same warning that execution is not guaranteed⁴.

Some platforms bundle these tools together. One offers recurring orders, limit orders and stop losses so that investors can control what they invest in and when⁵.

What protects you when an order goes wrong

If a platform fails to carry out your instructions correctly, or gives you misleading information about how an order works, there is a route to complain.

The Financial Ombudsman Service handles complaints about investments, including stocks and shares¹⁸. It is free to use and independent of the firm. Before going to the ombudsman, you normally need to complain to the firm first and give it a chance to put things right.

It is worth being clear about what the ombudsman can and cannot do. It can look at whether a firm followed its own terms and treated you fairly. It cannot make a limit order deal at a price the market never offered, and it cannot reverse a loss that came from the market moving rather than from a firm's error.

The limits of protection are worth stating plainly. A limit order that never deals is not a failure by the platform; it is the order working as designed. A limit order that deals at your price or better is also working as designed, even if the share price then falls. The protection available is about how the firm handled your instruction, not about whether the investment made money.

For free, impartial guidance on investing and on what to do if something goes wrong, MoneyHelper is the government-backed service. For complaints specifically about an investment firm's handling of an order, the Financial Ombudsman Service is the body that decides them¹⁸.