← Stocks · lesson 10 of 12
By the end of this one you'll know the difference between a market order and a limit order and exactly what each one tells the computer to do.
When you buy a stock, a small piece of a company, you send an order, which is just your instructions, and there are two main kinds. A market order says 'I'll take it right now at the going price', like calling my hay guy and saying bring me a load at whatever hay costs today. It almost always goes through fast, but the price can shift a hair between your tap and the fill, so the number on the screen is close but not carved in stone. A limit order says 'only at my price or better', like telling him I'll take a load at eight dollars a bale and to call me when he can do it. You set your number and you wait, and here's the catch, the call may never come, the price might never reach your number and the order just sits there. Neither one is right or wrong, they're two different instructions: right now, or my price or nothing.
Same lesson, told by a hundred dollar bill. Tap to walk it one step at a time.
In this example a share shows $10 and someone sends a $100 market order, but in the second it takes, the price ticks to $10. 05, so it fills at $10. 05 and buys about 9.
95 shares' worth.
A limit order set at $9.
90 spends nothing at all unless a seller meets that price, and if the price never gets there, the $100 just sits untouched, no trade, no fee.
Fast with a little wiggle, or exact with a maybe.
It's Friday, the paycheck landed, the bills are set, and you've got 40 dollars you decided months ago would be your learning money. The share you've been watching sits at 10 dollars in the app, and your thumb hovers over the screen while the kids fight over the remote.
Pick your move. Then peek at the other roads if you're curious.
A market order says right now at the going price, a limit order says my price or nothing, two different instructions and neither one is wrong.