Limit order

A limit order is a stock exchange order with a price restriction – you tell your broker: "Buy/sell, but ONLY at my desired price or better."

The most important order types:

1. Market order (at best):

• Immediate execution at the current best price
• Advantage: fast. Disadvantage: the price can be worse than expected (slippage)
• Dangerous with shares that have little trading volume!

2. Limit order:

• Buy limit: "Only buy if the price is AT MOST €50"
• Sell limit: "Only sell if the price is AT LEAST €50"
• Advantage: price control. Disadvantage: may not be executed

3. Stop-loss order:

• "Sell automatically if the price falls below €45"
• Protects against big losses (loss limitation)
• Watch out: with gaps, the execution price can be well below the stop

4. Stop-limit order:

• Combination: only activated when the stop is reached, then executed as a limit order
• More control, but risk of non-execution

5. Trailing stop:

• A stop-loss that follows automatically. Price rises → stop rises with it
• Ideal for securing profits while still benefiting from uptrends

Practical tip: for blue chips (DAX, S&P 500), a market order is usually fine. For small caps or outside trading hours: ALWAYS set a limit!