Next video:
Loading the player...

A market order executes a transaction as quickly as possible at the present price. Immediacy is the main concern. A limit order is executed at or below a purchase or sale price. Price is the key with limit orders.

Market orders are the most basic. A broker receives a trade order and processes it at the current market price. But prices might change between the time the broker receives the order and the time it’s executed. Occasionally, those changes can be large.

Limit orders give investors more control over the prices at which they buy and sell. Purchase orders require investors to select a maximum acceptable purchase price. Sales orders need a minimum acceptable sales price.

The risk with a limit order is the price may never fall within its guidelines, rendering it useless. Or there may not be enough liquidity in the stock to fill the order.

Limit orders are more expensive than market orders. But it can be difficult to find the price of a low-volume stock that is not listed on a major exchange. Limit orders are then a good option.

  1. No results found.
Related Articles
  1. Investing

    The Basics of Trading a Stock: Know Your Orders

    Taking control of your portfolio means knowing what orders to use when buying or selling stocks.
  2. Trading

    Understanding Order Execution

    Find out the various ways in which a broker can fill an order, which can affect costs.
  3. Trading

    How To Place Orders With A Forex Broker

    Learn how to set each type of stop and limit when trading currencies.
  4. Investing

    Narrow Your Range With Stop-Limit Orders

    With stop-limit orders, buyers protect themselves from prices too high for their tastes.
  5. Trading

    Explaining Buy Limit Orders

    A buy limit order allows traders and investors to specify the price that they are willing to pay for a security, such as a stock.
  6. Trading

    What's The Difference Between A Stop And A Limit Order?

    Find out what separates these two market orders and what they can do for you.
Hot Definitions
  1. Return on Assets - ROA

    Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets.
  2. Fibonacci Retracement

    A term used in technical analysis that refers to areas of support (price stops going lower) or resistance (price stops going ...
  3. Ethereum

    Ethereum is a decentralized software platform that enables SmartContracts and Distributed Applications (ĐApps) to be built ...
  4. Cryptocurrency

    A digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of ...
  5. Financial Industry Regulatory Authority - FINRA

    A regulatory body created after the merger of the National Association of Securities Dealers and the New York Stock Exchange's ...
  6. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by companies seeking the capital to expand ...
Trading Center