Difference between Market Order and Limit Order

Market Order

Limit Order

A market order is executed immediately, at the current market price.

A limit order is executed only at a price specified by you.

Ex: You see a stock trading at Rs 51 (this is the last traded price). You place a market order. Your market order is immediately executed at the current market price whether it is lower or higher than Rs 51.

Ex: Let’s say you want to buy a stock at Rs 50. You should place a limit order at Rs 50. Only if the price falls to Rs 50, is your order executed.

Market orders are good when you want to buy a stock for the long term and a few ticks in the price don’t matter.

Limit orders are good for the traders who want to lock into a stock at a specific price especially in volatile conditions.