{"id":977951,"date":"2022-03-04T15:35:13","date_gmt":"2022-03-04T20:35:13","guid":{"rendered":"https:\/\/www.finder.com\/ca\/?p=977951"},"modified":"2026-04-14T22:26:29","modified_gmt":"2026-04-15T02:26:29","slug":"market-order-or-limit-order","status":"publish","type":"post","link":"https:\/\/www.finder.com\/ca\/stock-trading\/market-order-or-limit-order","title":{"rendered":"Market order vs limit order"},"content":{"rendered":"

A market order buys or sells a stock at whatever the going price is currently, while a limit order makes the trade when a stock hits a price you’ve specified. Which type to use also depends on the situation. So here\u2019s what you need to know about the market order and the limit order and when it\u2019s best to use each one.<\/p>

Understanding market and limit orders<\/h3>

Market order<\/h4>

The market order is the most common and basic order type. Placing a market order allows you to buy or sell a stock immediately at its current market price. If you are buying a stock, the order will execute at the seller\u2019s asking price. If you are selling a stock, the order will execute at the buyer\u2019s bid price.<\/p>

One advantage of placing a market order is that as long as there are willing buyers and sellers, your order is almost guaranteed to be executed. The disadvantage of a market order is that the execution price is not guaranteed. That said, unless you are trading volatile stocks such as penny stocks<\/a>, market orders usually execute at or around the ask price (when you are buying) or bid price (when you are selling).<\/p>

Many brokers automatically default to using a market order unless you specify otherwise. If you want to buy or sell a stock at a specific price, that\u2019s where the limit order comes in.<\/p>

Limit order<\/h4>

A limit order allows you to buy or sell a stock at a specific price or better. When buying a stock, a buy limit order only executes at the limit price or lower. When selling a stock, a sell limit order only executes at the limit price or higher.<\/p>

For example, say you want to buy a share of XYZ stock for no more than $25. In this case, you could submit a buy limit order for $25 and your order will only execute if the price of XYZ stock is $25 or lower. Alternatively, if you want to sell a share of XYZ stock for no less than $25, you could submit a sell limit order for $25 and your order will only execute if the price of XYZ stock is $25 or higher.<\/p>

Unlike a market order, a limit order is not guaranteed to be executed. A limit order can only be filled if the stock\u2019s market price reaches the limit price.<\/p>

So how do you know when to use a market order or limit order?<\/p>

When to use a market order<\/h3>

For many investors, market orders are good enough. If you want to own shares of a company sooner rather than later and you\u2019re comfortable paying a price near where it\u2019s currently trading, a market order is likely your best option. Paying a few cents or a few dollars more or less likely won\u2019t matter much to you if you plan on holding the stock for a long time.<\/p>

Because stock prices can change quickly \u2014 especially in fast-moving markets or with low-volume stocks where there is a large difference between the price a buyer is willing to pay (bid price) and the price a seller will accept (ask price) \u2014 the price at which your market order executes might deviate a bit from the price you were quoted. With volatile stocks, this can be drastically higher or lower than the price you wanted to pay. In this case, a limit order can better protect the price you\u2019ll pay for a stock.<\/p>

When you might want to use a market order<\/h4>