What Are ‘Limit Orders’ and ‘Market Orders,’ and Which Type of Order Pays the Cost of Immediacy?

A market order is an instruction to buy or sell immediately at the best available current price, prioritizing speed of execution. A limit order is an instruction to trade at a specified price or better, prioritizing price control.

The market order is the order type that pays the cost of immediacy, as it removes liquidity and accepts the price set by the limit orders (the spread). The limit order earns the cost of immediacy for supplying liquidity.