When you go to buy or sell a stock, you don't just click 'buy' and hope for the best — you choose what type of order to place. The two most fundamental order types are market orders and limit orders, and understanding the difference can save you real money. A market order says: 'I want to buy (or sell) this stock right now at whatever the current price is.' A limit order says: 'I want to buy (or sell) this stock, but only at this specific price or better.' That one distinction changes everything about how your trade gets filled.

Market orders are the simplest and fastest. You click buy, the trade executes almost instantly, and you get your shares. The catch? You might not get exactly the price you saw on screen. Between the time you tap 'buy' and the time the order actually hits the exchange, the price can move — this is called slippage. On heavily traded stocks like Apple or Amazon, slippage is usually a few pennies. But on thinly traded stocks with wide bid-ask spreads, slippage can be significant. If a stock shows $10.00 but the nearest ask is $10.15, your market order fills at $10.15. On 1,000 shares, that's $150 more than you expected.

Limit orders give you control. If Apple is trading at $200 and you want to buy it, but only at $195, you set a limit buy order at $195. The order sits there waiting. If Apple drops to $195 or below, your order fills. If it never drops that low, the order doesn't execute — and that's fine, because you only wanted it at your price. The same works for selling: a limit sell at $210 means your shares only sell if the price hits $210 or higher. This is powerful for disciplined investors who have a specific entry or exit price in mind rather than chasing the market.

So which should you use? For large, liquid stocks (Apple, Microsoft, Tesla) during regular market hours, market orders are usually fine — the bid-ask spread is tight and slippage is minimal. For smaller stocks, thinly traded names, or volatile moments (like right at market open or during a news event), always use limit orders. Also always use limit orders for options — options spreads can be wide and market orders on options can cost you big. Here's a rule: if you don't know which order type to use, use a limit order. You might not get filled immediately, but you'll always get the price you wanted or better. That discipline compounds over time into real savings.