Limit orders – guaranteed price, but not execution
In general and brief, a limit order is an order to buy or sell the specified amount of the asset at the specified price or better.
What does better mean here?
This means that if I send a limit order to buy EURUSD at 1.0100, then any price below 1.0100 will match my order. On the contrary, if I send a limit order to sell EURUSD at 1.0100, then any price above this level will match. In other words, by using a limit order, I say that I am ready to buy or sell at any price no worse than the one specified in the order.
What happens if you send a limit order at a price that is better than the current market price? For example, a buy limit order at a price that is below the current ask? Well, it depends on the particular implementation of limit orders used by your broker or execution venue. If you trade at an exchange (for example, if you trade currency futures), then your order will be routed directly into the order book...