Beginner3 min readTrading on the Egyptian Exchange · 6/14
Order Types: Market Orders and Limit Orders
When you send a buy or sell order you make two key choices: deal at whatever price is available now, or only at a price you set. And a third: how long the order stays alive.
What you will learn
Tell a market order from a limit order.
Know what an order's validity period means.
Know which details your order must carry.
The lesson as a short video · 20 seconds · Watch on YouTubeIn this lesson
Market orderYou say "fill this quantity now at the best available price". It gets priority to fill, but the price is not guaranteed: if the quantity exceeds the first row, it continues at further prices. A full fill depends on enough matching liquidity.
Limit orderYou set the highest price you will pay, or the lowest you will accept. The price is in your hands, but the order may not fill, or fill only in part.
Same quantity, two outcomes
ExampleYou want 5,000 shares of an invented company, Zahra Spinning. The best ask is 15.40 for 3,000 shares, then 15.45 for 4,000. With a market order: 3,000 at 15.40 and 2,000 at 15.45, EGP 77,100 in total, an average of 15.42. With a limit order at 15.40: the 3,000 fill, and the other 2,000 wait for someone to sell at 15.40, and may never fill.
Market orderIn the example: filled in full3,000 × 15.402,000 × 15.45Average 15.42
Limit order at 15.40Part filled, the rest waits3,000 × 15.402,000 waitingPrice 15.40
A market order gets priority to fill at the best available prices, but the price is not guaranteed, and a full fill depends on enough matching liquidity. A limit order protects your price, but the fill is not guaranteed.
How long the order lives
An unfilled order does not wait forever. Its validity period decides how long it stays: perhaps only until the end of the session, or longer if you choose. When the period ends, the unfilled part is cancelled.
The order types and validity options actually available can differ by brokerage firm and the trading system it provides.
Details your order must carry
The Financial Regulatory Authority warns that an order must be complete: the date, the time it was handed to the firm, the stock, the quantity, the set price if it is a limit order, and the validity period. An incomplete order can be executed in a way you did not intend.
Watch outAfter execution, check that the trades on your account match your orders in price and quantity. And with a market order on a thinly traded stock, the price can land far from the last price shown.
Check the book before choosing
Open the stock's order book and see the quantity on the first row before deciding on the order type.
It fixes the price, but may not fill, or fill only in part.
2. Best ask 10.00 for 1,000 shares, then 10.10. You buy 2,000 with a market order. Average?
Half at 10.00 and half at 10.10: an average of 10.05.
Summary
A market order gets fill priority but no price guarantee, and a full fill depends on matching liquidity. A limit order protects the price but not the fill.
The validity period sets how long the order waits; options differ by broker.
Complete every detail of your order, and check the execution afterwards.