What happens if a limit order to buy is placed above the current ask price?

When a limit order to buy is placed above the current ask price, the transaction may not execute immediately because a limit order is not an obligation for the seller to sell at that price; rather, it indicates a willingness to buy at that price or lower. Since the ask price represents the lowest price at which a seller is willing to sell, placing a buy limit order above this price means that the order would only be executed if the market price drops back down to the specified limit price or lower.

Therefore, the order will remain unfilled until such conditions are met, making it critical to understand how limit orders function in relation to market prices. If the market price never falls to the limit price indicated in the order, the order sits in the order book until it is either canceled or filled by subsequent market activity, reinforcing the concept that such a limit order does not guarantee an immediate transaction.