Market Order vs. Limit Order

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Contributor, Benzinga
June 28, 2023

The price you pay for shares and the amount you receive upon selling them impact your total returns. Selling 100 shares of a company at $102 per share instead of $101.50 per share nets you an extra $50. While that may not sound like much in the grand scheme, trades like these can quickly add up. Investors can use multiple types of stock orders to potentially increase returns or get a swift order execution. While several stock order types exist, most investors use market orders and limit orders. Learning the difference between these two orders enables investors to make better real-time decisions with their portfolios.

What is a Market Order?

A market order is a stock order that executes right away at the market price. If the stock currently trades at $101 per share, the order goes through at $101 per share. If the stock price rises to $101.04 per share while you click the button to process the order, the order will go through at $101.04 per share. Most market orders go through instantly, and if the order gets partially filled, it remains open until it gets filled completely.


  • Get your order executed instantly
  • No need to monitor stocks to determine ideal entry and exit points
  • Can move on to another part of your portfolio, knowing the order went through.


  • Higher returns with limit orders
  • Price moves out of your control

What is a Limit Order?

A limit order is a stock order where the investor instructs the broker to buy or sell shares at a specific price. A sell limit order allows an investor to realize profits once the stock price reaches an acceptable level. For instance, if a stock trades at $140 per share, an investor can set a sell limit order for $142. With this order, the broker will only sell the designated number of shares once the stock reaches $142 per share.

A buy limit order takes the opposite approach. An investor who believes a stock valued at $140 will fall to $139 per share can set a buy limit order for $139. The order will only go through when shares fall to $139 per share, allowing the investor to save $1 per share.


  • Get lower entry prices with sell limit orders
  • Sell your shares at higher prices with buy limit orders
  • Base price on what you believe the stock’s intrinsic value is


  • Can lose value and stay in your account if you have a sell limit order
  • Can gain value and ensure your buy limit order does not go through
  • Requires more monitoring

Comparing Market vs. Limit Orders

Market orders and limit orders help investors are ways you can buy and sell stocks in the stock market. Some investment opportunities warrant market orders, while limit orders make more sense in other scenarios. Understanding the differences between these orders will allow you to determine which order makes sense for you.

Total Returns

Market orders give you returns based on the stock’s market price. Limit orders give you the potential to generate higher returns because you can save money on purchases and earn more money on sales. Limit orders give you the potential to earn more money in the long run than market orders.

Time to Execute the Order

Market orders happen instantly. In most cases, the stock price doesn’t move too much between initiating the market order and its execution. Limit orders can remain open for much longer and possibly go through the entire day without getting filled. You can walk away from your portfolio knowing a market order went through, but investors do not have that same luxury with limit orders.

Risk Factor

Market orders do not have as much risk. The stock price can swing by a few cents as you place the market order, but you end up with the shares quickly. A limit order can increase your total returns, but sharp price movements can make limit trades unfavorable. If a sell limit order lets you leave a position at $150 per share, you will lose out on gains if the stock rises to $155 per share. An investor can also lose out on gains if a buy limit order never gets filled due to the stock rising.

Options Trading

Options are highly volatile derivatives where sharp price movements can take place within seconds. When you place a market order, you can end up with a price point much different from what you expected. Limit orders can increase your returns as an options trader and help you secure better price points. The high volatility of options results in more price movements that can serve traders. However, options prices can quickly run past buy limit orders and below sell limit orders.

Trading Fees

The trading fees are the same regardless of whether you use market orders or limit orders. Brokers only charge a fee when the trade gets executed, and some trades don’t involve fees. Most brokers will waive the fee if you buy and sell stocks. However, you can expect per-contract fees if you trade options.

Are Market Orders or Limit Orders Right for You?

Market orders and limit orders both help investors buy and sell stocks. The right one for you depends on how you view the stock. Investors who want to wait for a stock to reach an optimal price before executing an order may benefit from limit orders. Investors who are more concerned with executing the trade than saving a few dollars here and there may benefit from market orders. It is also possible to use a combination of market orders and limit orders for your portfolio.

Frequently Asked Questions 


Which is better: limit or market order?


Limit orders and market orders have their pros and cons. You can make more money with limit orders, but market orders get executed instantly and have fewer risks.


What is the disadvantage to using a limit order?


The disadvantage to using a limit order is that the stock moves against the limit order, either resulting in greater losses or lost gains. Also, if the stock price doesn’t reach the price you set, the order will not be executed.


When should you use a limit order?


A limit order can make sense if you want to buy a stock for a discount or sell a stock at a higher price than the market price. If there is a slight mismatch between the stock’s value and its intrinsic value, a limit order may make sense.

Marc Guberti

About Marc Guberti

Marc Guberti is an investing writer passionate about helping people learn more about money management, investing and finance. He has more than 10 years of writing experience focused on finance and digital marketing. His work has been published in U.S. News & World Report, USA Today, InvestorPlace and other publications.