Why was the limit order executed at the market price instead of the specified limit price?

A limit order allows clients to buy or sell a stock at a specific price or a better price. In simpler terms, a buy limit order will only execute at the limit price or a lower price, never at a higher price. On the other hand, a sell limit order will execute at the limit price or a higher price, but not at a lower price.

For example, the LTP (Last Traded Price) of Reliance Industries is ₹2500, and the best bid and offer prices are ₹2498 and ₹2500, respectively.

●       Limit Buy Order Example:

You place a buy limit order for Reliance Industries at ₹2550. However, there is a sell offer at ₹2500. Even though your buy order is at ₹2550, the order will be executed at the best available price, which is ₹2500. So, you end up buying the stock for ₹50 less than your intended price, benefiting from the lower price.

●      Limit Sell Order Example:

Now, let’s consider you want to sell Infosys shares. The LTP of Infosys is ₹1700, and the best bid and offer prices are ₹1698 and ₹1700, respectively. You place a sell limit order at ₹1650, but there is a buy bid at ₹1698. The order will be executed at the higher price of ₹1698, which is ₹48 more than your intended sell price.

In both cases, the exchange's matching engine ensures that your limit orders execute at the best possible prices, either lower for a buy or higher for a sell.