Order types (limit and market orders)
Key points
- A limit order gives price control but no guarantee of execution; a market order guarantees execution but not price.
- Market orders are practical in liquid stocks, while limit orders in thinly traded stocks prevent execution at unexpected prices.
- a market order can fill at a very poor price when the bid-ask spread is wide.
Formula / calculation
day orders are cancelled at session end; good-till-cancelled orders stay for a set number of days; fill-or-kill and immediate-or-cancel orders cancel any part not filled at once. Conditional (stop) orders activate when a set price prints and are used for stop losses.
Interpretation
A market-to-limit order converts the unfilled remainder into a limit order after partial execution.
Market orders are practical in liquid stocks, while limit orders in thinly traded stocks prevent execution at unexpected prices. Orders sent to the opening auction match at a single price.
Pitfalls
a market order can fill at a very poor price when the bid-ask spread is wide. Limit orders are subject to queue priority and may not fill even if the price prints. Order type names vary across brokers.
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Frequently asked questions
What is Order types (limit and market orders)?
A limit order asks to execute at a specified price or better; a market order executes immediately at the best available price without a price limit.
How is Order types (limit and market orders) calculated?
day orders are cancelled at session end; good-till-cancelled orders stay for a set number of days; fill-or-kill and immediate-or-cancel orders cancel any part not filled at once. Conditional (stop) orders activate when a set price prints and are used for stop losses.
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