TL,DR: Not all transactions are the same

Market Order / Accepting the Price

Like checking out at the grocery store and paying the cashier the amount displayed on the register, market orders are transactions at the current price and do not involve negotiation.

Limit Order / Negotiating the Price

Like haggling on price, limit orders involve consumers setting a maximum or minimum amount for a transaction, and will only be processed if both parties accept the proposed price. Imagine you are at a farmer’s market and cannot afford the listed price of $3/lb on a bushel of corn. You might feel ostentatious enough to demand $2/lb or walk away from the deal, at which point the farmer can accept or tell you to take a hike. Limit orders happen the same way, via a simple price modification within online brokerage platforms.

Eatamology

“Market” refers to how orders are typically executed at the current price available on the financial marketplace.

“Limit” refers to the limitations on a buyer or seller’s willingness to pay.

Financials

When buying or selling a product, a brokerage will give you the option to place a market order or a limit order. With a market order, you are accepting the next available price for a product. Behind the scenes, the broker is looking for a counter-party to buy what you are selling, or sell what you are buying. they have estimated a price for you, similar to the price you may see on a product in the grocery store aisle shelf, which-is never guaranteed until checkout. At checkout, brokerage platforms will notify you if the price has changed substantially from its listed value, and if it has gotten worse - they may cancel the trade. Typically they will also cancel any trades not executed before the end of day - which is 4pm in the stock market. To avoid the risk of price movement or guarantee a price, investors set limit orders, which say “I will pay no more than XX for this product.”

TL,DR: Not all transactions are the same

Market Order / Accepting the Price

Like checking out at the grocery store and paying the cashier the amount displayed on the register, market orders are transactions at the current price and do not involve negotiation.

Limit Order / Negotiating the Price

Like haggling on price, limit orders involve consumers setting a maximum or minimum amount for a transaction, and will only be processed if both parties accept the proposed price. Imagine you are at a farmer’s market and cannot afford the listed price of $3/lb on a bushel of corn. You might feel ostentatious enough to demand $2/lb or walk away from the deal, at which point the farmer can accept or tell you to take a hike. Limit orders happen the same way, via a simple price modification within online brokerage platforms.

Eatamology

“Market” refers to how orders are typically executed at the current price available on the financial marketplace.

“Limit” refers to the limitations on a buyer or seller’s willingness to pay.

Financials

When buying or selling a product, a brokerage will give you the option to place a market order or a limit order. With a market order, you are accepting the next available price for a product. Behind the scenes, the broker is looking for a counter-party to buy what you are selling, or sell what you are buying. they have estimated a price for you, similar to the price you may see on a product in the grocery store aisle shelf, which-is never guaranteed until checkout. At checkout, brokerage platforms will notify you if the price has changed substantially from its listed value, and if it has gotten worse - they may cancel the trade. Typically they will also cancel any trades not executed before the end of day - which is 4pm in the stock market. To avoid the risk of price movement or guarantee a price, investors set limit orders, which say “I will pay no more than XX for this product.”