Limit orders are placed on a stock or other security to buy or sell at a specific price, while market orders are placed to buy or sell at the best available price.
What is the difference between a limit order and a market order?
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The difference between limit and market order is how the order affects the market. A limit order will not affect the price of an asset while it remains in the order book, but once it is executed, it will change the price of that asset.
Market orders will change an asset’s price immediately when executed. , at best possible price. Limit orders will only execute the order if and when a specific price is reached. Price increases from limit orders occur when the asset price reaches or exceeds the price specified in the order.
Price decreases from limit orders occur when the price of an asset goes below the price specified in a limit order. An order purchased at a low market but sold at a high market will buy and sell at different prices, with each transaction taking place at a different time.
If both transactions are executed as limit orders, they will be filled as close to simultaneously as the market allows. In general, limit orders are preferable to market orders because they limit losses due to market price movement.
The advantage is that the transaction is not filled until the price reaches a specified level or boundary, or in this case, until a specific “limit” price has been reached.