Limit order

A limit order describes the instruction an investor gives to his broker setting out how much he's prepared to pay for shares (or any other asset for that matter).

In other words, if you say to your broker, "Pay up to six quid for LloydsTSB shares", you're specifying the maximum price you're willing to pay, or setting a limit order.

Similarly, when selling shares (or any other asset), you may say to your broker "Get the best price you can, but don't take less than £5 a share."

If you've a broker helping you to manage your share portfolio, you may wish to instruct him of prices at which he should buy or sell.

Last Updated: June 2007 © Moneyextra.com

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