Market Order or Limit Order

Discussion in 'Order Execution' started by traderharley, Jan 6, 2011.

  1. I opened account with IB, they have market order and limit order. If I want to buy, I can send in a Market Order or I can send in a buy Ask, per your experience, which kind of order is better? Buy ask will get better price than Market Order, or the same? I like to day trade stocks. What order would you use for day trading? Thanks a lot.
  2. MTE


    You should really educate yourself quite a bit more before jumping into trading.

    A market order means buy/sell at any price.

    A limit order means buy/sell, but only to the specified price.

    With a market order you are guaranteed to get filled, but you don't know what price you will be filled at.

    With a limit order you are guaranteed to get no worse than the specified price, but you are not guaranteed to get filled.
  3. Thank you so much Abattia and MTE, very clear and concise explanation of the different orders.
  4. If you use Market Orders...
    Or anything that turns into a Market Order...
    You are a complete fish.
  5. It's important to understand when to use them as well as what they are. This is just my example.

    When I trade credit spreads, I always enter with a limit order. If my spread loses more than my stop and I "must" exit, I use a market order.
  6. if the market is not liquid, it is best to place limit order. If the market is extreme liquid, it is best to place market order
  7. lindq


    Best answer yet.

    If you are trading a highly liquid stock with a penny spread, and you want into the trade, use a market order.

    With a limit order, you may not get filled at all if price moves. One of the more frustrating things you can experience is sending in a limit order and watching the stock take off without you.

    But it you are scalping for a couple pennies or trading thinly traded stocks, then use a limit.
  8. Thank you all for the input.

    Suppose NFLX last price is $180, current bid price is $179.90, ask price is $180.10, and at the moment, we think NFLX is going up and we need to make $2-3 profit, and we are going to send in a buy order. Are you going to buy at ask - $180.10, or at bid $179.90, or in between the bid and ask, such as $180?

    Do you think buy ask price is the same as buy market price?
  9. Both types of orders have their uses. It depends on your style of trading. For my swing style of trading, I use Limit orders 99% of the time. Why? Because when I use a Buy Limit order, I'm deciding the price I'll pay, with a Market order someone else is deciding what price I'll pay. Stocks can run away from you when use Limit orders. But for Market orders, you can get fill prices that are far away from the price you thought you would get. As with many things in trading there are trade-offs. I did hear about one couple that put in Market Sell orders during the flash crash of May 6th, 2010 and they received over $100,000 less than they thought they were going to get for the stocks they were selling. In this case a Limit Order and a few minutes would have saved them $100,000. Of course, you could argue that at the time no one knew what was happening and WW3 could have been starting and if that we the case maybe the fills they got with a market order would have been "high" prices. If you MUST sell RIGHT NOW, then Market Order is your only choice. If you can wait a few seconds or minutes, as I usually can, then a Limit order is a better choice IMHO.
    #10     Jan 8, 2011