Market vs Limit Order
A market order buys or sells immediately at the best available price. A limit order only fills at your chosen price or better. Stop orders add a trigger price. Here’s how each works.
The main order types
| Order | What it does | Guaranteed to fill? | Price guaranteed? |
|---|---|---|---|
| Market | Fills now at the best available price | Almost always | No |
| Limit | Buys at or below / sells at or above your price | No | Yes, your price or better |
| Stop (stop-market) | Becomes a market order when the stop price is reached | Usually, once triggered | No |
| Stop-limit | Becomes a limit order when the stop price is reached | No | Yes, if it fills |
| Trailing stop | A stop that follows the price by a set distance as it moves in your favour | Usually, once triggered | No |
Market orders and slippage
A market order prioritises speed. In a fast or thin market, it can fill at a worse price than the one you saw when you clicked. That difference is slippage. For large orders, a market order can also “walk the book”, filling at several progressively worse prices.
Limit orders
Buy limit orders go below the current price; sell limit orders go above it. You get your price or better, but if the market never reaches it, the order doesn’t fill, and you might miss the move.
Stop orders
Buy stop orders go above the current price (often used to enter on a breakout); sell stop orders go below it (often used as a stop loss on a long position). When the price touches the stop, a market order is sent, so slippage is possible, especially if the price gaps past your level.
Example
A stock trades at $50. A buy limit at $48 waits for a dip. A buy stop at $52 waits for a breakout. A sell stop at $47 on a long position limits the loss if the price falls.
Order duration
Orders can be day orders (cancelled at the close) or good-til-cancelled (GTC), which stay open until filled or cancelled, often up to a broker-set limit. Check how your broker handles orders outside regular market hours.
Educational explanation only. ChartWatch is independent and doesn’t give trading or investment advice. Trading carries a risk of loss.
FAQ
What is the difference between a market order and a limit order?
Is a stop order the same as a stop loss?
What is slippage?
Where do you place a buy limit order?
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