Lesson 3 of 8
Market vs Limit Orders
How to control what price you pay
Market Order
Buy/sell immediately at current price
Guaranteed to execute
You might get a worse price in fast markets
Good for: liquid stocks you want NOW
Limit Order
Buy/sell only at your price or better
Might not execute if price never reaches your limit
You control the exact price you pay
Good for: setting your entry/exit price
Example: AAPL is at $250. A market order buys at whatever the next available price is, maybe $250.02. A limit order at $248 only buys if the price drops to $248 or lower.
pro tip
Always use limit orders for less liquid stocks or large orders. Market orders on penny stocks can fill at terrible prices.
Check yourself
When should you definitely use a limit order instead of market?