what is a buy limit order 
when a trader sees a financial instrument that he wishes to purchase but only at a price lower than where it currently stands he may place a buy limit order which would instruct his broker to automatically open the position if and when the price reaches what the trader is willing to pay for it in essence it is the trader s way of instructing his broker to open a position at a better rate than the current market price the advantage to a buy limit order is that the trader decides how much he is willing to pay for an asset and not have to spend more than that amount the disadvantage is that if the price drops close to his limit yet without touching it before shooting back up he will not have spent anything but he will have missed the opportunity to earn a profit when the asset price reversed direction 