Market Order vs Limit Order: What Each Guarantees, With an Order Book Example

A market order fills as soon as possible at the best prices available; a limit order sets the worst price it will accept and may fill in part, later or never.

Every order a broker or an exchange accepts answers one question first: is getting the trade done more important than the price, or the other way round? This page covers what each order type guarantees and what it does not, a worked example against a hypothetical order book, the marketable limit order that sits between the two, maker and taker, how long an order stays live, and where Kresmion shows order books. Kresmion is a data terminal, not a broker: it places no orders and holds no funds. It is descriptive throughout.

The two orders in one paragraph each

Market order. FINRA describes it as the most common type of investor order, and the one that provides the most certainty that the order will be executed, because it is not tied to any restrictions. The trade-off is in the same sentence: the order will typically execute at or near the current bid or ask, and the price can differ from the one seen or quoted, especially in fast-moving markets. Investor.gov makes the same point another way: the last traded price is not necessarily the price at which a market order will be executed.

Limit order. An order to buy or sell at a specified price or better. A buy limit can only execute at the limit price or lower, and a sell limit only at the limit price or higher. FINRA spells out the other side of that guarantee: there is a chance the order does not get executed at all, if the market never reaches the limit while the order is active.

So each order fixes one thing and leaves the other open. A market order fixes execution and leaves the price open. A limit order fixes the worst acceptable price and leaves execution open.

A worked example against an order book

Take a hypothetical stock quoted 50.00 bid and 50.05 ask. Behind those two numbers is a book of resting limit orders from other traders:

A market order to buy 600 shares. It takes the cheapest asks first and keeps going until it is filled: 200 shares at 50.05 ($10,010), 300 at 50.06 ($15,018) and the last 100 at 50.10 ($5,010). The total is $30,038, an average of about 50.063 a share. Had all 600 shares been available at the quoted 50.05, the cost would have been $30,030. The extra $8 is slippage: the quote on the screen was good for 200 shares, not 600. Investor.gov notes the same limit on any quote, that it is only for a specific number of shares.

A limit order to buy 600 shares at 50.06. It also executes at once, because 50.06 is at or above the best ask, but only against asks priced 50.06 or lower: 200 at 50.05 and 300 at 50.06, 500 shares for $25,028, an average of 50.056. The first 200 shares filled a cent below the limit, which is what "at the limit price or better" means. The remaining 100 shares cannot buy at 50.10, so they rest in the book as a new bid at 50.06. The quote is now 50.06 bid and 50.10 ask.

A limit order to buy 600 shares at 50.02. Nothing on the ask side is that cheap, so nothing fills. The order rests as the new best bid, the quote becomes 50.02 bid and 50.05 ask, and the order waits for a seller willing to trade at 50.02. If none arrives before the order expires, it never fills.

The same arithmetic runs the other way for a sale: a market order to sell 500 shares into this book would take 400 at 50.00 and 100 at 49.98, $24,998 in total, about 49.996 a share.

The marketable limit order

The second example above is a limit order priced at or through the other side of the book. It behaves like a market order for every share available up to its limit, then stops. That is why it is called a marketable limit order: it trades immediately, with a ceiling on the price for a purchase or a floor for a sale.

Some venues are built entirely on this idea. Polymarket's documentation says that all orders on Polymarket are technically limit orders, and that a "market order" is simply a limit order priced to execute immediately against resting orders. Kresmion's explainer on how to read a prediction market order book walks the same climb up the asks shown above on a live Polymarket book.

Maker and taker

The two orders play different roles in the book. An order that rests and waits adds liquidity: it is the maker. An order that executes against what is already resting removes liquidity: it is the taker. In the worked example, the 100 shares left over at 50.06 became maker liquidity, and the market order that bought 600 shares was a taker from start to finish.

The distinction matters because many venues price the two differently. Polymarket's fee page, at the time of writing, says makers are never charged fees and only takers pay, on the markets that carry a fee. The firms that quote both sides of a book all day are covered in what a market maker is, and the gap between the best bid and the best ask that every taker crosses is the subject of the bid-ask spread.

How long an order stays live

A limit order that does not fill straight away needs an expiry rule, called its time in force. FINRA lists the common ones:

• Day order. Active through the current trading day. Activity in extended hours, after the regular session ends at 4 p.m. Eastern, has to be requested separately.
• Good till cancelled (GTC). Stays open until it fills or is cancelled, within a maximum period the brokerage firm sets.
• Immediate or cancel (IOC). Fills whatever it can right away and cancels the rest.
• Fill or kill (FOK). Fills the entire order immediately or not at all.
• All or none (AON). Fills only in full, but without the immediacy of fill or kill.

Polymarket's order types follow the same pattern under its own names: good till cancelled, good till date, fill or kill, and fill and kill, the last of which fills what is available and cancels the rest.

A stop order is a third family, and it is built from the first two. Investor.gov describes it as an order that becomes a market order once the price reaches a specified stop price, and FINRA adds that a stop-limit order triggers a limit order instead. Because a triggered stop order is a market order, its fill price can differ from the stop price; a triggered stop-limit order carries the limit order's trade-off and may not fill.

Where Kresmion shows order books

Kresmion does not route, place or hold orders. What it shows is the book that orders meet, for prediction markets. The public pages under prediction market odds carry a market liquidity block for the more actively traded Polymarket markets: the best bid, the best ask, the mid, the spread in percentage points, and the dollar value resting within 1 percent of the mid on each side, with the time the snapshot was captured. That block is the top of the order book in the example above, for a contract that pays $1.

Inside the signed-in workspace, a Polymarket market's detail page adds depth for the top levels of each side of the book and, on markets whose fee it can price, a panel titled "What would a trade cost?". That panel compares crossing the book with a $1,000 or $10,000 buy or sell, slippage plus the taker fee, against resting a limit order. For stocks, Kresmion shows the last traded price; the live bid, ask and depth at the moment of a trade are what a broker quotes.

Honest limitations

The worked example uses one hypothetical book that does not move. Real books change between the moment an order is sent and the moment it arrives, and visible size is not the whole story: some orders are not displayed, and quotes can be cancelled as an order reaches them. In US equities a broker can route an order to an exchange, a market maker or another venue, so the book a reader sees on one screen is not necessarily the one the order meets. Where the order is executed can also offer what Investor.gov calls price improvement: the opportunity, but not the guarantee, of a better price than the current quote. Fees, rebates and order types differ by broker and venue, and the ones named here are the venues' own descriptions at the time of writing.

Key takeaways

Frequently asked questions

Which is cheaper, a market order or a limit order?

Neither is cheaper in every case. A market buy pays the ask and a market sale receives the bid, so it crosses the spread, which costs half the spread measured from the mid, plus the slippage of walking the book if it is larger than the size quoted at the best price. In US stocks a broker may also fill it at a better price than the quote. A limit order caps the price, but if it never fills, the trade does not happen at all, and whether that is a cost depends on what the price does next.

Can a limit order fill at a better price than the limit?

Yes. A buy limit executes at the limit price or lower and a sell limit at the limit price or higher. In the worked example, a buy limit at 50.06 bought its first 200 shares at 50.05.

Why did my limit order not fill when the price reached my limit?

A trade printed at a price does not mean every order at that price was reached. A buy limit needs a seller at or below the limit, and many charts plot trades or bids rather than the ask, so a low that touches the level is not enough. Other orders may also have been resting at the same price and filled first, the volume that traded there may have run out before reaching yours, and in US stocks the print may have happened on a different venue from the one holding the order.

Is a market order on a prediction market really a market order?

On Polymarket, technically no. Its documentation says every order is a limit order, and a "market order" is a limit order priced to execute immediately against resting orders, which is the marketable limit order described above.

Does Kresmion let me place orders?

No. Kresmion is a data terminal and not a broker. It shows order book snapshots and execution cost estimates for prediction markets, and last traded prices for stocks, but it does not route orders, execute trades or hold funds.

This page is information, not investment advice.

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Source: FINRA, Order Types, https://www.finra.org/investors/investing/investment-products/stocks/order-types ; FINRA, Trading Terms: Time Parameters and Qualifiers on Stock Orders, https://www.finra.org/investors/insights/time-parameters-qualifiers-stock-orders ; Investor.gov (SEC), Types of Orders, https://www.investor.gov/introduction-investing/investing-basics/how-stock-markets-work/types-orders ; Investor.gov (SEC), Executing an Order, https://www.investor.gov/introduction-investing/investing-basics/how-stock-markets-work/executing-order ; Polymarket documentation, Prices and Orderbook, https://docs.polymarket.com/concepts/prices-orderbook ; Polymarket documentation, Order Lifecycle, https://docs.polymarket.com/concepts/order-lifecycle ; Polymarket documentation, Fees, https://docs.polymarket.com/trading/fees ; Kresmion prediction market liquidity snapshots and execution cost panel. The order book and all prices in the worked example are hypothetical.

Kresmion Research.