What is the difference between market and limit orders?
Note: For simulation purposes, Trading Game uses market orders for trade entry. This article explains both order types for educational purposes to help you understand how real markets work.
Market Orders vs. Limit Orders
Understanding order types is essential for controlling how your trades execute. While Trading Game focuses on market orders to keep the learning experience simple and beginner-friendly, knowing the difference between order types is important for real-world trading.
Market Orders
A market order executes immediately at the current market price.
- Pros: Fast execution, guaranteed to fill
- Cons: Price may differ from what you saw (slippage)
- Best for: When you need to buy/sell quickly
Limit Orders
A limit order only executes at your specified price or better.
- Pros: Control over execution price
- Cons: May not fill if price doesn't reach your limit
- Best for: When price matters more than speed
Example
Stock XYZ is trading at $50:
- Market buy: You get shares immediately around $50
- Limit buy at $48: Order only fills if price drops to $48
Tip: In real trading, use limit orders for volatile stocks to avoid paying more than expected.
In Trading Game
Trading Game is designed to be a streamlined learning experience:
- Opening Trades: When you tap Buy or Sell, you are placing a Market Order. This ensures your trade executes immediately so you can see results right away.
- Managing Trades: You can set Stop Loss and Take Profit orders. These act as pending orders to automatically close your trade when the price hits your target or risk limit.
This combination gives you the speed of market entry with the risk management of pending exit orders.
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