A limit order is an instruction to your broker to execute a trade at a particular level that is more favourable than the current market price.
They differ from market orders, which instruct your broker to execute a trade at the best current available price. Limit orders allow you to specify the minimum price at which you will sell, or the maximum at which you will buy. If you want to open an order to buy or sell an asset at a price that is less favourable than the current market price, you use a stop order.
There are two varieties of limit orders; entry orders (that open a new position) and closing orders (that terminate an open position). By using both, traders are able to execute a trade automatically at a certain level instead of constantly tracking the price of an underlying asset.