A market order buys execution and gives up price; a limit order buys price and gives up execution. The SEC's order-types bulletin, updated 18 August 2026, puts a number on the first half: a market order for 1,000 shares entered when the best offer is $3.00 per share can have 500 shares execute at $3.00 and the other 500 execute at a higher price. The condition that decides which side of the trade-off costs you is liquidity at your price, because a limit order can only be filled if the stock's market price reaches the limit price.
A market order is an instruction about speed
A market order is an order to buy or sell a stock at the best available price, and it is generally executed immediately, but the price at which it executes is not fixed in advance. The number on your screen is not a commitment. The last-traded price is not necessarily the price at which a market order will be executed, and the execution price often deviates from it because of demand and the prices of available liquidity at the time of execution.
The size of the quote is the reason. Because price quotes are only for a specific number of shares, investors do not always receive the price they saw on their screen. A market order for more shares than sit at the best price walks up the book, which is why a quote and a fill are different numbers.
A limit order is an instruction about price
A limit order is an order to buy or sell a stock at a specific price or better: a buy limit can only be executed at the limit price or lower, and a sell limit only at the limit price or higher. FINRA states the same rule from the other side of the trade: an executed limit order returns the limit price or better.
That last clause is the cost. A limit order is not certain to execute, and it can only be filled if the stock's market price reaches the limit price. Nothing in the rulebook rescues an unfilled order either. No SEC regulations require a trade to be executed within a set period of time.
Example: 1,000 shares of XYZ with a $3.00 best offer
The SEC's own example, and a mechanism rather than a strategy. An investor places a market order to buy 1,000 shares of XYZ when the best offer is $3.00 per share; 500 shares execute at $3.00 and 500 execute at a higher price. Put the higher price at $3.04 and the cost is 500 times $3.00, or $1,500, plus 500 times $3.04, or $1,520, for a total of $3,020 and an average of $3.02 a share. The fictional half of that example is the $3.04; the $3.00 offer and the 500-share split are the SEC's.
Replace the market order with a buy limit at $3.00 for the same 1,000 shares and the second half never happens. Five hundred shares fill at $3.00 for $1,500, and the remaining 500 sit unfilled at the limit. You saved $0.04 a share on 500 shares, which is $20, and you hold half the position you asked for. That is a partial fill, not a broken order.
The four order types compared
Scroll sideways to see the full table →
| Order type | What it does when it reaches the market | What you control | What you give up |
|---|---|---|---|
| Market | Executes at the best available price | Timing | The execution price |
| Limit | Executes at the limit price or better | The price | Whether it executes |
| Stop | Becomes a market order at the stop price | The trigger | The execution price |
| Stop-limit | Becomes a limit order at the stop price | The trigger and the price | Whether it executes |
Every line of that table comes from the same bulletin: when the stop price is reached a stop order becomes a market order, and a stop-limit becomes a limit order that will be executed at a specified price or better. The pairing is what the stop and stop-limit mechanics turn on.
Reaching the limit price is not the same as filling
A limit order that watches the tape print its limit price and still sits unfilled is behaving correctly. The print means one trade happened at that price, not that yours was in line for it. Different trading venues and firms also apply different standards for triggering, some using only last-sale prices and others quotation prices, so identical instructions behave differently depending on where the order sits.
The remaining lever is time. A limit order that is not filled during the session expires unless you attach a longer instruction, which is what the order's time condition sets.
Source references
Primary sources used for this guide. Follow the links for the original scope, definitions and conditions.
- Understanding Order Types – Investor BulletinAccessed 2026-09-17
- Trade Execution: What Every Investor Should KnowAccessed 2026-09-17
- Order TypesAccessed 2026-09-17