Market Order Vs. Limit Order

A market order is an order to buy or sell a stock at the best available price. Generally, this type of order is executed immediately. However, the price at which a market order will be executed isn’t guaranteed. It’s important for investors to remember that the last-traded price isn’t necessarily the price at which a market order will be executed. In fast-moving markets, the price at which a market order is executed often deviates from the last-traded price or real-time quote.

A limit order is an order to buy or sell a stock at a specific price or better. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher. A limit order is not guaranteed to execute. A limit order can only be filled if the stock’s market price reaches the limit price. While limit orders don’t guarantee execution, they help ensure that an investor doesn’t pay more than a predetermined price for a stock.