Market Orders vs Limit Orders

When you buy or sell a stock, the order type determines how and when your trade is executed.

Market Order

A market order executes immediately at the best available price. You are saying: "Buy (or sell) this stock right now, at whatever the current price is."

Pros: Fast execution, guaranteed to be filled (if the market is open) Cons: The exact price may differ from what you see — especially in fast-moving markets. This difference is called slippage.

Limit Order

A limit order sets the maximum price you're willing to pay (for buying) or the minimum you're willing to accept (for selling). The trade only executes if the market reaches your price.

Pros: Price control — you know the worst-case price Cons: No guarantee of execution. If the price never reaches your limit, the order won't fill.

When to Use Each

• Market orders are common for highly liquid stocks where the price difference between what you see and what you get is minimal.
• Limit orders are useful when you want a specific entry or exit price, or when trading less liquid stocks where prices can jump.