Market or limit order? The differences and when to use each

A market order buys or sells immediately at the best available prices, so it is fast, but the execution price is not known in advance. A limit order sets a maximum buy price or a minimum sell price; it goes into the order book and waits for the market. It guarantees the price but does not guarantee execution.

A market order usually costs more: you pay the spread, and with low liquidity you get slippage. A limit order can be cheaper, but it may never be filled if price moves away. A common mistake is placing a limit too far from the market in hope of a “perfect” entry, or using a market order in the middle of a price spike. Platforms also offer conditional orders, such as stops.