Which type of order guarantees a specific price when executed?

A limit order guarantees that a trade will be executed at a specific price or better. This means that when the order is placed, the investor specifies the maximum price they are willing to pay for a buy order or the minimum price they are willing to accept for a sell order.

For example, if an investor places a buy limit order at $50, the order will be executed only if the stock's price reaches $50 or lower. Similarly, a sell limit order will only execute when the market price is at or above the limit price set by the seller. This ensures that the investor has control over the pricing of the trade, providing a level of price assurance that can be crucial in volatile market conditions.

In contrast, other types of orders, such as market orders and stop orders, do not guarantee a specific price. A market order is executed at the best available price in the market at the time, which may result in a price that is not favorable to the investor if the market moves rapidly. A stop order activates a market order once a specified stop price is reached, but again does not ensure a fixed price. A stop limit order is a combination of the two, stopping at a certain price but then requiring a limit price for execution,