When you buy or sell a stock, you don’t just decide how many shares you want — you also have to decide how you want your order carried out. Finance expert Suze Orman recently explained this choice on her “Women & Money” podcast after a listener, Sharon, asked about using limit orders in today’s volatile market.
Sharon, who is 83, said she doesn’t want to spend her days glued to stock charts but wants to understand the best way to buy or sell shares. Orman broke down the difference between the two main order types — market orders and limit orders — and when each may make sense.
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What Is a Market Order?
A market order is the most straightforward way to buy or sell a stock, according to Orman. You place the order, and it’s executed immediately at whatever the stock’s current market price is.
As Orman explained, if you want to buy 100 shares of a company right now, a market order will fill that request instantly. You may not know the exact price until the order goes through, but you can be confident the trade will happen quickly.
This type of order is often used when the most important thing is getting into — or out of — a position right away.
What Is a Limit Order?
A limit order gives you more control over the price you’re willing to pay — or accept — when buying or selling. Instead of saying “buy this stock at whatever it costs right now,” you set a target. For example, you might decide you only want to buy shares if they fall to $45 or sell if they rise to $60.
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Orman noted that you can also choose whether the order is valid just for the trading day or set it as “good till canceled.” In that case, the order remains active until the price hits your target or you cancel it manually.
This approach can be helpful if, like Sharon, you don’t want to watch the market constantly. However, it comes with a tradeoff: the order might never execute if the stock doesn’t reach your set price.
When Limit Orders Can Help — or Hurt
Limit orders can protect you from paying too much in a fast-moving market or from selling at a price you’re not comfortable with. KT, Orman’s podcast co-host, shared a story about her brother, who once placed a limit order for a client before leaving on vacation. When the market crashed unexpectedly, the limit order saved the client from a major loss and turned him into “a hero overnight.”
But as Orman cautioned, limit orders can also work against you. If your price is set too close to where the stock is already trading, professional traders may swoop in, triggering the order briefly before prices move in the opposite direction.
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That’s why Orman suggests using alerts or notifications from your brokerage account. If a stock you own hits a certain level, you can decide whether to act rather than relying only on preset orders.
Choosing the Right Approach
For investors, the choice between market and limit orders depends on priorities. If speed and certainty matter most, a market order may be the simplest path. If price control is more important, a limit order can help — but patience is required, and there’s no guarantee the trade will go through.
As Orman explained, both tools have their place. The key is knowing how each works so you can decide what fits your strategy, risk tolerance, and comfort level with monitoring the market.
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This article Limit Orders Vs. Market Orders: Suze Orman Explains The Difference And When To Use Them originally appeared on Benzinga.com
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