Limit Order

• Limit orders instruct a broker to buy or sell a security, usually a stock, at a specific price. On the buy side, the limit order may tell the broker, "buy XYZ stock if you can get it at $20 a share or less." On the sell side, it would be, "sell my stock in XYZ but only at $20 or more."
  
  

Function

• The advantage of limit orders is that (using the buy side as our example) the customer is protected against the danger in volatile markets that the order will not go through until the price has spiked to $30 or $50. A customer might rather not buy XYZ at all than risk buying at the top of a spike.
  
  

Market Order

• Market orders instruct a broker to buy or sell a security, usually a stock, at the current market price at the time of execution. Depending on the policy of your brokerage firm as to commissions, execution of a market order may be less expensive.