Limit orders explanation
In the example we want to buy a share and set limit on $20. If this limit order is standing, shouldn't the orange curve be above the limit price?
Hello Ruslan!
Thanks for reaching out!
The orange curve is just specifying where the existing price is. A limit buy order can be higher than the existing stock price. In fact, this is one of the key features of a limit order. A limit buy order allows an investor to specify the maximum price they are willing to pay to purchase a stock. If the current market price of the stock is below the specified limit price, the order will be filled at the lower market price. However, if the current market price is above the specified limit price, the order will not be filled until the stock price falls to the specified limit price or lower.
Please let me know if you have any other questions.
Best,
The 365 Team
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