In placing an order to purchase an asset, you can choose to excecute a Market Order or a Limit Order. Here's the key differences between the two:
Market Order
You buy or sell immediately at the best available price.
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Fast and simple
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Price may change slightly
Example:
You want to buy a stock right now during market hours. You place a market order and it fills instantly at the current price.
Limit Order
You set the exact price you’re willing to buy or sell at.
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More control over price
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Order may not fill
Example:
A stock is trading at $100. You place a limit order to buy at $95.
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If the price drops to $95, it fills
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If not, nothing happens
Quick takeaway:
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Market order = speed
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Limit order = price control
Many long-term investors use limit orders to avoid surprises, especially in volatile markets.