Limit orders allow traders to set the limit price at which a particular instrument can be bought or sold. Setting the right limit price is essential in determining the viability of the limit order, as a limit price that is too far removed from the going market price is unlikely to be filled in the short-term. Conversely, setting the limit price too close to the market price may render the use of a limit order obsolete. 

Here’s how limit buy and sell orders work:

• Buy Limit Order: A buy limit order is placed when a trader wants to purchase a security at a specific price or lower. It will only be executed if the market price reaches the specified limit price or drops below it. This order is used when a trader believes that the market price will decrease and wants to enter a position at a more favorable price
• Sell Limit Order: A sell limit order is used when a trader wants to sell a security at a specific price or higher. It will only be executed if the market price reaches the specified limit price or goes above it. This order is employed when a trader believes that the market price will rise and wants to exit a position at a better price

Regularly using limit orders while trading comes with certain advantages and disadvantages and traders need to carefully consider these factors to make the most of the opportunities presented by limit orders. 

Pros

• Price Control: Traders have precise control over the price at which they buy or sell a security, which can help them achieve their desired entry or exit points
• Avoid Slippage: Limit orders help traders avoid slippage, where trades are executed at a less favorable price than intended, which is common with market orders
• Patience and Strategy: They encourage disciplined and patient trading because they remain in the market until executed or canceled, allowing traders to wait for their preferred prices
• Protection: Limit orders can protect traders from unexpected price fluctuations and volatile market conditions, as they are executed at the specified price or better

Cons

• Execution Risk: There is no guarantee that a limit order will be executed. If the market never reaches the specified price, the order may go unfilled, potentially causing missed trading opportunities
• Delayed Execution: Limit orders do not provide immediate execution. They may remain in the market for an extended period until the specified price is met, which can be problematic in rapidly changing markets
• Partial Fills: In some cases, a limit order may only be partially filled if the market briefly touches the specified price and then moves away, leaving part of the order unfilled
• Market Gaps: During periods of high volatility or news events, market prices can gap, meaning they may move significantly beyond the specified limit price, causing the order not to be filled at the expected level

• A limit order is a type of trading order that is only executed if the price of a security reaches the limit price set by the trader
• Limit orders help avoid unexpected price variations during execution, unlike market orders
• There's no guarantee of execution if the limit price is not reached; the order might go unfilled. For this reason, they may remain open for a while, which can lead to missed opportunities in rapidly changing markets
• In some cases, only part of the order may be executed if the market briefly touches the specified price
• Limit orders give traders more control over their strategies and gives them the ability to set price-sensitive boundaries while trading