Dictionary / Trading and orders
Market Order vs Limit Order
A market order buys or sells right away at the best price available. A limit order only buys or sells at the price you choose, or better.
Market order
You click buy, and it fills almost instantly at whatever the current price is. Simple and fast. The risk: in a fast-moving or thinly traded stock, the price you get can be worse than the one you saw. See liquidity.
Limit order
You say: buy 10 shares, but only at $50 or less. If the price never drops to $50, nothing happens. You control the price, but your order might never fill.
Which should you use?
For big, busy stocks during normal hours, a market order is usually fine. For small stocks, wide bid-ask spreads or after-hours trading, a limit order protects you from a bad price.
Other order types
A stop-loss order sells automatically if the price drops to a level you set, to limit your loss.
See it in real companies
Open a company to see what it sells and how it makes money.