If you want to buy or sell a stock, a limit order ensures your trade won’t execute until the price you specify is reached. Limit orders can be placed on buy side, sell side or both and are usually valid for up to three months. However, they’re not without their drawbacks, including non-execution risk and problems involving liquidity.

If there’s not enough demand for the shares at your limit price, your order won’t be executed, especially with small or illiquid stocks. In addition, the market can move so quickly that your order may only be partially filled and executed at a different price than what you originally specified.

The Best Limit Order Calculators for Traders in 2025

For example, suppose you set a limit order to sell 10 shares of a certain company when the stock reaches $55 per share. If the company announces a new product that is a game-changer and causes the stock to spike, your limit order may not be executed because there aren’t enough buyers at your limit price.

Alternatively, the company may get bad news and the stock plummets. In that case, your limit order may be executed at a lower price than you expected. This can be particularly problematic with long-term limit orders that can execute up to three months from the time you entered them. It’s also possible to forget about your limit orders, leading to surprise trades that you didn’t anticipate. For this reason, you should be careful when using these tools to avoid surprises and potential disappointments.