MARKET vs. LIMIT Order - Any Difference?

Discussion in 'Order Execution' started by BillCh, Apr 16, 2009.

  1. BillCh


    Is for example a LONG LIMIT order where the limit is underneath the actual price (so not preventing the entry) being treated - by my broker IB and/or the exchange - the exact same way as a MARKET order would be? Or are there any preferences which order will be filled first and/or better? I am talking about GLOBEX (mini-) futures and stocks on NYSE and NASDAQ?

    I am asking because now whenever I get an entry signal I enter a limit order with the limit at the current price (or 1 tick higher/better). In addition, I want a smaller size order to be entered at the same time now, but as a "market order" for a higher fill rate. So I wonder if e.g. I could place a limit order with lets say 1 or 2 ticks below the actual price just to avoid a short spike placing an entry order with a bad fill (in terms of price), or, if a market order would be filled first/preferred at the exchange?

  2. piezoe


    If i understand your question correctly, and i'm not sure i do, if you place a limit order to buy below the current price, i.e., below the ask, then that is a conventional limit order. It won't get filled until the ask, i.e., the offer, drops to your limit price. And even then it might not fill if there are other limit orders ahead of yours and the offer size is not sufficient to fill all of the limit orders at that price. (As long as you are trading very liquid issues this will not usually be a problem.)

    If you place a limit order to buy above the current ask price, then that is what is called a "marketable limit order" and it gets treated as a market order. Market orders take precedence over limit orders and get filled first. Your marketable limit order would join the other market orders and be executed in the order received.

    Of course if your order is being handled by humans, such as a specialist or market maker on the floor of an exchange, rather than by a computer, then all bets are off with regard to where a marketable limit order might get filled. There is, after all, no honor among thieves. :D
  3. Market orders are "please screw me!!!" orders. If you've got no control over the price you've paying, how do you want to be profitable at all?
  4. If the market is already under the buy limit then I'd think it would just become a market order. Ie: Buy at 8730 and its trading at 8720. I hope you wouldn't get filled at 8730! hahaha


  5. In futures, you used to be able to mark a limit order that could be filled immediately with the phrase "OR BETTER" to avoid anyone's thinking that a stop order might have been intended.

    I do not know if that can still be done...
  6. Days of wisdom are gone...enter the digital world...
  7. Reealjrd


    A market order is a buy or sell order in which the broker is to execute the order at the best price currently available.

    A limit order is an order to a broker to buy a specified quantity of a security at or below a specified price, or to sell it at or above a specified price.
  8. We rarely if ever us market orders. For retail traders, it can be even worse, since the broker will likely trade against you or match your order with another retail trader. We send limit orders to sell a couple pennies lower than bid, and vice versa for buys.

    I realize that most retail brokers charge less for market orders, but you may very well be giving up a lot as well. Just watch your time and sales.


  9. Tcbjx9


    only use it for panic orders
  10. I have to say that some of the opinions expressed on this thread come across as somewhat short sighted. All order types have their legitimate uses otherwise they wouldn't exist. Which order type to use depends entirely on the execution you want. They all have pros and cons. It's your job to decide which one best fits the job in hand. Saying market orders are 'screw me' orders is ridiculous, unless you haven't bothered to assess the liquidity in the market before placing your order, in which case you fully deserve and should expect to be rigidly screwed sideways.
    #10     Jun 13, 2009