Limit Order

A limit order is an instruction to buy or sell an asset at a specified price or better. Unlike a market order, which executes immediately at the current price, a limit order will only be filled when the market reaches the desired price level. Limit orders give traders more control over their entry and exit prices.

A trader wanting to buy EUR/USD but only at a specific level might place a limit buy order at 1.0850 while the market is currently trading at 1.0900. If the price pulls back to 1.0850, the order is triggered and filled. In a prop trading environment, using limit orders rather than market orders helps traders manage their costs more effectively by avoiding slippage, which is especially important when working within tight risk parameters and trying to maintain a consistent risk-to-reward ratio on each trade.