Get exclusive money-saving offers and guides
Straight to your inbox
By signing up, you agree to the Finder
Privacy & Cookies Policy
and
Terms of Use, Disclaimer & Privacy Policy.
Limit orders: Definition, example and FAQs
Get the exchange rate you want for your international money transfer when you place a limit order.
Guides
We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!
Getting the best possible exchange rate is important whenever you send money overseas, but sometimes current market conditions don’t allow you access to the rate you want. This is where limit orders come to the rescue. A limit order allows you to choose the exchange rate at which you want to buy or sell a currency and your order will only be executed when the rate you want is available. These flexible tools offer a convenient way for you to stay on top of market developments, hedge your transfer and get the exchange rate you want for your transaction.
Trading CFDs and forex on leverage is high-risk and you could lose more than your initial investment. It may not be suitable for every investor. Refer to the provider’s PDS and consider the risks before trading.
Disclaimer: Exchange rates change often. Confirm the total cost with the provider before transferring money.
Important: Share trading can be financially risky and the value of your investment can go down as well as up. “Standard brokerage” fee is the cost to trade $1,000 or less of ASX-listed shares and ETFs without any qualifications or special eligibility. If ASX shares aren’t available, the fee shown is for US shares. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
What is a limit order?
A limit order allows you to choose a target exchange rate for an international money transfer - that is, the rate at which you are hoping to convert your Australian Dollars into another currency to be sent overseas.
This is a very flexible money transfer option that effectively allows you to keep pace with market developments and send money overseas at an exchange rate suitable to you. You can leave your order in place for up to six and even 12 months - if your desired exchange rate is achieved then the order will be triggered, but the order simply won’t be placed if the target rate does not occur.
How do limit orders work?
Trading on global currency markets occurs 24 hours a day, which might ordinarily mean that you might miss out on an attractive exchange rate overnight while you’re fast asleep. Limit orders are basically a way for you to get your money transfer company to monitor currency markets for you.
All you have to do is tell your money transfer provider your desired rate, how long you’re willing to wait for the order to be placed, the currency you wish to buy or sell and the amount you wish to purchase. You can then sit back and wait as your money transfer provider watches currency markets to see if your desired exchange rate can be achieved - if it can, your order will be placed.
For example, with the current exchange rate at 1 AUD = 0.69 USD, Greg isn’t quite prepared to send a transfer of $25,000 to the USA until he can get a better rate. He places a transfer limit order and nominates a target rate of 1 AUD = 0.74 USD, and when that rate is reached five months later, the transfer is triggered and Greg’s funds are sent overseas.
What are the types of limit orders?
This article deals with limit orders solely in regards to international money transfers; however, limit orders can be an effective tool across a wide range of investments including shares and commodities.
Back to topHow do I compare limit orders?
- The company’s exchange rates. It’s important to check the exchange rates on offer from each money transfer provider to determine how close they are to the mid-market rates. This will give you a better idea of how much the market will need to fluctuate in order for the transfer company to be able to offer you the rate you want.
- Fees charged. In addition to any transfer fee you will have to pay as standard, will you have to pay an extra fee when you place a limit order?
- Length of order. How long will your order be valid for? Some companies will offer orders for up to 12 months while others will only allow you to place orders for 12 months.
- How the order can be placed. Can you place a limit order online, over the phone or maybe using a mobile app?
- Minimum amount. Is there a minimum limit you are required to transfer using a limit order? For example, limit orders placed with OFX need to be for amounts larger than $30,000.
- Notification process. How will each provider notify you once your order has been placed?
What are the pros and cons of limit orders?
Pros
- Stay up to date. Limit orders allow you to make the most of market fluctuations, even while you’re asleep.
- Get the exchange rate you want. Limit orders allow you to get better value for money when you send funds overseas.
- Change your order. Until your desired rate is reached, you have the freedom to withdraw or change your order.
Cons
- High amounts. Limit orders are typically only available for larger transfers, for example $20,000 or more.
What are the risks of limit orders?
One thing to be wary of after placing a limit order is growing impatient and just accepting the current rate on offer, while another is the fact that you may have to wait months for your order to be executed and you could forget about it.
The other disadvantage of limit orders is that the exchange rate could keep on improving after your desired rate has been reached, but because you’ve already locked in your order you will be unable to take advantage of the rising market rate.
Frequently asked questions
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.
More guides on Finder
-
Finder Daily Deals: The 5 best online deals in Australia today
Today's best Finder Daily deals include: 50% off car essentials at Catch, half-price meat thermometers, eBay Plus tech sale.
-
Polkadot (DOT) cryptocurrency: How it works and where to buy
Learn more about the DOT cryptocurrency in this beginner’s and buyer’s guide.
-
Aave cryptocurrency: How it works and where to buy
Learn more about the AAVE cryptocurrency in this beginner’s and buyer’s guide.
-
Best bike lights in Australia
These are the six best bike lights you can buy in Australia right now.
-
Best toys for 1-year-olds in Australia
These are the 7 best toys you can buy for 1-year-olds in Australia.
-
Best French Door Fridges in Australia
These are the 6 best French door fridges you can buy right now in Australia.
-
Best gaming monitors in Australia
These are the best gaming monitors you can buy right now in Australia.
-
HDMI 2.1 explained: TV and gaming with PS5 and Xbox Series X
Here's everything you need to know about HDMI 2.1
-
Best milk frothers in Australia
These are the six best milk frothers you can buy right now in Australia.
-
Best camera drones in Australia
These are the best camera-equipped drones you can buy right now in Australia.
Ask an Expert
