Limit order or market order?

One purchase, four orders

You want to buy 500 shares. The book is the same made-up example as in the order book lesson: 300 shares are offered at $100.00, 700 at the next price, and the best bid is $99.90.

The market order goes through at once and costs $100.04 on average. The limit order at the next price gets the same trade here, but it would have stopped if the price had moved above its limit.

The limit order at $100.00 buys what is there at that price, and the rest stays in the book as a bid. The limit order at $99.90 buys nothing now. It joins the queue of buyers and waits for a seller.

What you choose between

The difference is what is guaranteed. A market order guarantees a trade but no particular price. The SEC puts it this way: the last-traded price is not necessarily the price at which a market order will be executed, least of all in a stock with few orders or a fast-moving price.

A limit order guarantees your price or better, but maybe no trade. If the price rises away from you, you have not bought. You can also get only part of what you wanted. An order that stays open lasts until you cancel it or the time you chose runs out.

When selling it is the other way round: the limit is the lowest price you will take.

Other orders you may see

A stop order waits until the price reaches a set level, and then it becomes a market order. If the price jumps past the level, the trade can happen far from it, so it guarantees no price. How large a position can be if you plan to sell at a set price is in the position size calculator, and how often a fixed stop has sold for nothing in the lesson on stop losses.

Sources

• US Securities and Exchange Commission, Types of Orders, read on 5 November 2026.