As pending orders that tell a broker to open or terminate a position when an asset’s price reaches a specific level, limit and stop orders are frequently mistaken with one another.
Buy limit orders state that a position should be taken when the market price drops below the level at which it is currently trading. Sell limit orders state that a position should be taken when the market price reaches a level above the price at which the order is being filled. In contrast, sell stops are put below the current market price and purchase stops are entered above it.
Bear in mind that pending Limit orders are executed with ‘Limit Execution’, meaning you will receive your requested price or better, whereas Stop orders are executed with ‘Market Execution’.
