2 Minutes of Market and Limit Orders Explained

Faster VS Guaranteed

Let’s talk about the difference between a market order and a limit order in the stock market. Imagine you're ordering a pizza.

Market Order: A market order is like calling the pizza place and saying, "I want a cheese pizza, and I want it now!" You don't care about the exact price; you just want your pizza as soon as possible. In the stock market, a market order is when you buy or sell a stock at the current market price. You're saying, "I want to buy this stock, and I'm willing to pay whatever the current price is."
Market orders happen faster, getting you into the stock faster without guaranteeing the price you’re paying.

Limit Order: Now, a limit order is a bit different. It's like calling the pizza place and saying, "I want a cheese pizza, but I only want to pay $10 for it." With a limit order in the stock market, you set a specific price you're willing to buy or sell a stock for. You're not willing to pay more (if you're buying) or accept less (if you're selling) than that set price. You set the price. So, you wait until the stock's price matches your specified amount, just like waiting for the pizza place to agree to sell you the pizza for $10 before you buy it.
Limit orders happen slower but it guarantees you do not buy for more or sell for less than the price you want.
Note: Sometimes a stock will never touch the price you chose again. This means your order will not be placed. The order will stay open until you cancel it or the stock eventually touches the price you chose again.

Recap: In short, a market order is like buying something right away at the current price, while a limit order is like setting a specific price you're willing to pay or accept and waiting until the stock's price matches that amount.