Finance and Investment Challenge Practice Test

The concept is a price-bound instruction for trading. A limit order sets the exact price at which you’re willing to buy or sell, and the trade will only execute at that price or a more favorable one. This guarantees you won’t pay more than you’re willing to pay when buying (or receive less than you want when selling), though it may not fill if the market never reaches your price. By contrast, a market order would fill immediately at the current price, with no price limit. A stop order is designed to trigger a trade when the price hits a certain level and then usually becomes a market order, and an executive order isn’t a trading instruction at all.