A market order asks to trade promptly at the best available price. A limit order sets the worst price the investor is willing to accept. Neither instruction guarantees both price and execution.
The quote can move
The last traded price is history, even if only milliseconds old. In a fast or thin market, the next available price can differ.
That difference is more noticeable when the bid-ask spread is wide.
A limit can remain unfilled
A buy limit will not execute above its limit, and a sell limit will not execute below its limit. The protection comes with the possibility that no trade happens.
Partial fills are also possible.
Order choice should match the asset
A highly liquid broad-market fund during normal hours behaves differently from a thin security near the open. Order type is one part of managing that difference.
Read the broker's order rules before clicking submit.
Sources
- U.S. Securities and Exchange Commission, Investor Bulletin: Trading Basics.
- FINRA, Understanding Order Types.