An order to buy or sell a futures contract at a specific price or better. The trade will only execute if the market reaches the specified price.
Why It Matters
- 1Limit orders give traders control over entry and exit prices, helping manage risk and avoid slippage in fast-moving markets.
- 2They are essential for precise trade planning.
Example
A trader wants to buy a futures contract at 4,500. They place a limit order at 4,500. The order will only fill if the market reaches that price or lower.
Common Mistakes
- ✖Assuming stop orders guarantee the exact execution price
- ✖Placing stops too close, causing premature triggers from normal market fluctuations
- ✖Failing to update stops as positions move in profit
- ✖Confusing stop orders with limit orders