A limit order is a type of order used in trading that allows an investor to buy or sell a security at a specific price or better. For example, if an investor wants to buy a stock, they can set a limit order at a price lower than the current market price. The order will only be executed if the stock reaches that price, ensuring the investor does not pay more than they are willing to. Limit orders provide more control over the price at which a trade is executed compared to market orders, which buy or sell immediately at the current market price. This can be particularly useful in volatile markets, where prices can change rapidly. However, there is no guarantee that a limit order will be executed if the market does not reach the specified price.