# 🤝 Order Types

By [Let Them Eat Cake](https://paragraph.com/@ltecake) · 2022-06-21

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**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.”

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*Originally published on [Let Them Eat Cake](https://paragraph.com/@ltecake/order-types)*