Every order you place is a choice between two things you cannot have together:
- Certainty that it executes
- Certainty of the price
A market order picks the first. A limit order picks the second.
Market order: "buy it now, at whatever price"
A market order says: execute immediately at the best price currently available.
You do not specify a price. You are accepting whatever the order book offers.
Sell orders currently resting in the book:
| Price | Quantity |
|---|---|
| ₹250.00 | 30 |
| ₹250.10 | 50 |
| ₹251.50 | 400 |
You place a market buy for 200 shares.
- 30 shares at ₹250.00 = ₹7,500
- 50 shares at ₹250.10 = ₹12,505
- 120 shares at ₹251.50 = ₹30,180
Total ₹50,185, average ₹250.93.
You saw ₹250 on the screen. You paid an average of almost ₹251, because there were only 80 shares available near ₹250. That gap is called slippage.
In a heavily traded stock, slippage is a few paise and irrelevant. In a thin stock, it can be several percent, and it is entirely your loss.
Limit order: "buy, but not above this price"
A limit order says: execute only at my price or better.
- Buy limit at ₹250 → fills at ₹250 or lower, never higher.
- Sell limit at ₹260 → fills at ₹260 or higher, never lower.
"Or better" is real. A buy limit at ₹250 placed when the best offer is ₹249.50 fills at ₹249.50, not ₹250. You never do worse than your limit, and you sometimes do better.
The cost: if the price never reaches your limit, nothing happens. You sit in the queue, and at the end of the day the order expires (unless you used a longer validity).
The stock trades at ₹255. You place a buy limit at ₹250.
Case 1: The price falls to ₹249 during the day. Your order fills at ₹250 or better. Good.
Case 2: The price never drops below ₹253 and closes at ₹258. Your order expires unfilled. You own nothing and the stock ran away from you.
That second case is the real cost of a limit order, and it is not a small one.
Partial fills
A limit order can fill partially. Order 500 shares at ₹250, only 180 are available at ₹250 or better, and you get 180. The remaining 320 stay in the queue waiting.
Market orders fill fully as long as enough quantity exists in the book, which is usually true in liquid stocks and sometimes not in illiquid ones.
Which to use, honestly
Use a limit order when:
- The stock is thinly traded — always
- You have a specific price in mind
- You are placing a large order relative to the stock's normal volume
- The market is volatile, or it is the first minutes after the open
- You are not watching the screen
A market order is defensible when:
- The stock is very liquid and the bid-ask spread is a paisa or two
- You need to exit right now — a stop-loss being hit, bad news, an intraday position that must be closed
- The exact price matters far less than being done
A middle path
Many traders use a limit order placed at or slightly through the current market price — a buy limit a little above the best offer. It executes essentially immediately, like a market order, but with a hard ceiling on the damage if the book is thinner than expected.
This gives you most of the speed of a market order and keeps a safety cap. For a beginner, it is often the best default.
Key takeaways
- Market order = certain execution, uncertain price. Limit order = certain price, uncertain execution.
- Slippage is the gap between the price you saw and the price you got, and it grows as liquidity falls.
- A limit order fills at your price or better, never worse — but it may not fill at all.
- Never use a market order in a thinly traded stock.
- A limit order placed slightly through the market gives you speed plus a safety cap.
Check your understanding
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