What is limit order?

What it means

A buy limit sits below the current market and a sell limit sits above it. The order rests in the book until price reaches your level, and if price never gets there the order simply expires or is cancelled. That is the trade-off: you control the entry price completely, and in exchange you accept that some trades will never happen.

Why it matters

Limit orders are the natural fit for mean-reversion and level-based approaches, where the whole premise is that price has moved too far and will come back. They fit poorly with momentum and breakout approaches, where waiting for a better price usually means waiting for the move to be over.

What this changes in practice

There is a practical constraint on gold specifically. Most brokers enforce a minimum distance between the current price and any pending order — the stop level — and on XAUUSD that distance is often wide enough to make tight limit entries impossible. Systems that were designed on a symbol with a zero stop level frequently fail on gold for exactly this reason.