Market & Limit Orders
A market order executes immediately at the best available price — execution is certain, price is not; a limit order sets a maximum buy price or minimum sell price — price is protected, execution is not.
Expect a scenario that hands you a quote and a limit price and asks whether the order fills, and at what price. The “or better” rule is the tell: a limit executes at the limit price or more favorably — a buy limit at 30 fills at 30 or lower, a sell limit at 40 at 40 or higher — so an answer claiming a customer paid more than a buy limit is wrong. Watch too for the marketable (or “executable”) limit order, priced at or through the current quote so it fills right away like a market order, and for partial fills.
Don’t confuse limits with stop orders: a buy stop rests above the market and a sell stop below — the mirror image of limits (mnemonic: BLiSS = buy limits/sell stops below, SLoBS = sell limits/buy stops above). Also separate the order type from best execution (FINRA Rule 5310), the firm’s duty to use reasonable diligence for the best market on every order, regardless of type. Memory hook: “limit = your price or better, but maybe never.”
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