See: Limit Order.
A limit down represents a type of limit order.
You own a stock currently sitting at $25. You decide to take the day off from trading to go see a performance of Wagner's complete Der Ring des Nibelungen.
You're worried about a big sell off while you're away, so you put a limit down order in place. If the stock drops by $5 a share, your broker will automatically sell.
These "limit down" situations can be more general as well. Some exchanges have limit down barriers that kick in if a stock or commodity (or whatever) drops too far too fast. If an asset hits this limit down level, trading curbs come into play.
See: Limit Move.
Related or Semi-related Video
Finance: What are Limit Order, Sell Limi...7 Views
Finance a la shmoop what is a limit order? you want to sell a thousand shares
of Colonel electric it was demoted after they cut their dividend the shares have [Scissors cuts dividend in half]
been trading wildly between $15 and $25 a share you don't want to feel like a
moron for having sold them at fifteen bucks when six weeks later they kissed
25 with tongue so what do you do well you put in a limit order that is you put
a limit of a minimum price of 25 bucks a share for Colonel Electric such that [Pile of stocks appear]
those shares will simply sit in your account unsold maybe forever until
somebody out in the wild blue yonder of Stockland is willing to pay twenty five [Woman standing at a colonel electric stand]
dollars or more for the shares where you have a minimum price limit of 25 bucks a
share in your order so here's to hoping they sell and don't get further demoted [Man carries stock into car]
Sargent Electric is just a place you don't want to go
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