Market, limit and stop orders.
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Quick answer

What is the difference between a market order and a limit order?

A market order tells your broker to trade at the best available price, so execution is prioritised over price certainty. A limit order sets the worst price you are prepared to accept: the maximum price for a buy or the minimum price for a sell. A limit order may never execute if the market does not reach your price.

On the ASX, brokers may use a market-to-limit implementation rather than a pure market order. Moneysmart also notes that brokers can offer additional order types, so the exact behaviour should be checked with your broker.

What is a market order?

A market-style order aims to trade against the best available opposing prices. The advantage is speed. The trade-off is that the final average price can be worse than the price you saw on screen, especially when the stock is moving quickly or there is not much volume available near the current quote.

That difference is slippage. It matters more in thinly traded shares and during fast moves.

What is a limit order?

A buy limit specifies the maximum price you will pay. A sell limit specifies the minimum price you will accept. This gives you more price control, but no guarantee that anyone will trade with you.

A limit order can be partially filled, not filled at all, or sit in the market while price moves away. Price certainty and execution certainty are not the same thing.

What is a stop order?

A stop order, stop-loss instruction or other conditional order generally becomes active only after a trigger condition is reached. The exact implementation depends on the broker and product. Once triggered, the resulting order still has to interact with the market.

This means a stop trigger is not necessarily a guaranteed exit price. If a share closes at $1.00 and opens the next session at $0.80 after bad news, there may be no opportunity to trade at every price between those levels.

Which order type is best?

There is no universally best order type. The choice depends on whether price control or immediacy matters more, how liquid the security is, how large your order is relative to normal trading activity and what your broker actually supports.

For beginners, a sensible habit is to inspect the bid, offer, spread and visible liquidity before sending any order. The last traded price is not a promise that your order will fill there.

Why do gaps matter?

A gap occurs when the next available trades happen materially above or below the previous trading area. Company announcements, market shocks and thin liquidity can all create gaps. A stop can reduce some behavioural risk by predefining an action, but it cannot force the market to provide liquidity at your preferred price.

What should you learn next?

Read Stop-Loss Orders, Gaps and Slippage, then Trading Risk for Beginners and How the ASX Works.

References: ASIC Moneysmart, “How to buy and sell shares”; ASX, “How to buy and sell shares”, accessed 2026. Always check your broker’s own order definitions before use.