Market vs Limit Orders
Definition
A market order executes immediately against resting orders at the best available prices. A limit order specifies the worst price the trader will accept and executes only at that price or better, resting in the book until filled, cancelled or expired. The CFTC defines a limit order as one 'in which the customer specifies a minimum sale price or maximum purchase price.'
Why it matters
Order type decides who pays the spread and the fee, and how much slippage is possible. Patient traders using limit orders can trade at better prices and lower fees but risk missing the trade; impatient ones pay for certainty. Investors should choose deliberately and know whether their order will be treated as maker or taker.
Common misconceptions
- •A market order does not guarantee the quoted price.
- •A limit order does not guarantee a fill.
- •Maker and taker status depends on whether the order rests first, not on what it is called.
- •The label is only a starting point. Investor outcomes usually depend on the governing documents, cash-flow priority, valuation policy, disclosure quality, and manager discretion surrounding the term, not just the shorthand definition used in marketing materials.
Technical details
Polymarket order types
GTC: good till cancelled; standard limit order.
GTD: good till date; auto-expires.
FOK: fill or kill; all-or-nothing.
FAK: fill and kill; partial fills accepted, remainder cancelled.
Post-only: rests only; rejected if it would cross the spread.
How investors apply the term
Investors usually apply this term by tying the definition back to the controlling documents and then asking which cash flows, rights, restrictions, or valuation assumptions it changes. A useful review looks at the term alongside fees, leverage, liquidity, reporting frequency, and manager discretion rather than treating it as a standalone concept.
The practical diligence test is simple: identify who benefits if the assumption is wrong, who has control when conditions change, and what evidence the investor receives after closing. Terms that cannot be reconciled to documents, cash movements, and monitoring data should be treated as marketing shorthand until proven otherwise.
Frequently asked questions
- Should I use a limit order in a thin prediction market?
- Usually. In a thin book a market order can walk through several levels and pay well above the quote. A limit order caps the price but may fill only partly or not at all. Polymarket notes that 'all orders on Polymarket are technically limit orders. A market order is simply a limit order priced to execute immediately against resting orders.'
- What order types are available?
- On Polymarket: good till cancelled (rests until filled or cancelled), good till date (expires at a set time), fill or kill (fills entirely or is cancelled), and fill and kill (fills what is available and cancels the rest). A post-only order 'will only rest on the book' and is rejected if it would match immediately, which 'guarantees you're always the maker, never the taker.'
- Do order types affect fees?
- Often. On Polymarket 'makers are never charged fees. Only takers pay fees,' and makers can earn rebates. On Kalshi's standard schedule the taker fee applies to orders that take liquidity, with maker fees on some non-standard series. A resting limit order that is filled by someone else is usually the cheaper side.