A limit order is a type of order to purchase or sell a stock at a specified price or better. It gives traders control over the price at which they trade. This method is utilized when the trader expects the stock price to follow a particular trend, but not indefinitely, so they set a limit order to lock in their predicted price.

For example, if you own a stock currently priced at ₹10 and you want to sell if the price reaches ₹15, you can set a limit order at ₹15. This order will only be executed if the stock price reaches or exceeds ₹15.

Alternatively, if you want to buy a stock currently priced at ₹30, but you’re only willing to pay ₹25 or less, you can set a limit order for ₹25. The order will then be executed when the stock price falls to ₹25 or below.

Limit orders allow investors to trade with more precision, where they set the price instead of the market. However, there is no guarantee that a limit order will be executed, as it requires the market price to reach the limit price. It’s also possible for a limit order to be partially filled, depending on the number of shares available at the specified price.