Forex: Limit Order (the limit order)

An instruction to buy or sell if a market moves to a more positive (that is, an instruction to buy if the market falls to a level indicated or sell if a market goes up to a specified level) is called an order to Limit. A limit order is often used to take profit on position but also can be used to establish a new position.


Example
EUR / USD is currently at 1.2713/16. You think the euro will become stronger, but
you think the EUR / USD will fall below 1.27 before it rises. You
can put a limit order to buy EUR / USD at 1.27. Your order to
Limit is executed when the EUR / USD is offered at 1.27.