Limit order
A limit order is an instruction to buy or sell only at a specified price or better. It rests in the market until price reaches that level; if price never gets there, it never fills.
A buy limit sits below the current price, a sell limit above it. The defining guarantee is one-sided: the order can fill at your price or a better one, never a worse one, which makes it immune to negative slippage on entry. The trade-off is fill uncertainty — price can approach your level, reverse a fraction short of it, and run the move you predicted without you. A take-profit is simply a limit order attached to an open position.
Limit orders are the tool of patient entries: buying a pullback into support, selling a rally into resistance, or working an entry inside the spread instead of crossing it. The opposite instrument — pay whatever it takes to be filled now — is the market order.
Example
EURUSD is offered at 1.0872. Instead of buying at market, you place a buy limit at 1.0850 for 2 standard lots with a stop at 1.0830. The order fills only if price pulls back 22 pips; at $20 per pip on 2 lots, that entry is $440 better than chasing at 1.0872, and the 20-pip stop risks exactly $400. If the pullback never comes, the cost is an unfilled order — a missed trade, not a loss.
In a prop-firm challenge
Precise entries keep risk arithmetic honest. A planned $400 risk stays $400 because a limit entry cannot slip, which matters when every trade is budgeted against a daily loss limit. Pending orders also remove the temptation to chase — a common failure mode under evaluation pressure. One caution: some firms restrict pending orders and fills around major releases, so check the news-trading rules before leaving resting orders through an announcement.