TL;DR A market order says "buy it NOW at whatever the price is." A limit order says "buy it only at my price or better." Speed versus control — that's the whole choice.
The plain-English version
Every broker gives you at least two ways to buy or sell:
- Market order: executes immediately at the best available price. You're guaranteed the trade happens; you're not guaranteed the price you saw on screen.
- Limit order: you name your price. Buying with a $50 limit means you'll pay $50 or less — or nothing happens at all. Guaranteed price, not guaranteed execution.
Where market orders bite: the spread
At any moment a stock has two prices: the highest anyone will pay (bid) and the lowest anyone will sell for (ask). The gap is the spread. Market orders buy at the ask and sell at the bid — you pay the gap.
On Apple, the spread is pennies; a market order is basically fine. On a small, thinly-traded stock, the quote might be $4.80 bid / $5.20 ask — a market buy instantly costs you 8% versus the midpoint. And if few shares are available, a big market order keeps "walking up the book," filling at worse and worse prices. This is how beginners buy a spiking meme stock and instantly show a loss.
The reasonable defaults
Big, liquid stock during market hours, small order: market order is fine, convenience wins. Small-cap, anything spiking, after-hours, or a large order: limit order, always. You can set a limit near the current ask and usually fill immediately anyway — same speed, with a seatbelt.
The common mistake
Two of them. Placing market orders while the market is closed — it executes at Monday's open, which can be anywhere. And setting insulting lowball limits, never filling, then chasing the stock with a market order three days later at +12%. The limit is a tool, not a fantasy.
Educational only — not investment advice. The order type won't pick winners; it just stops the door from hitting you on the way in.