Market vs limit order
A market order guarantees a fill, not a price. A limit order guarantees the price, not the fill — a choice between a certain entry and control of price.
| Criterion | Market | Limit |
|---|---|---|
| Execution | Almost immediate — the market is moving | Only when the price touches your level |
| Price | Unknown in advance (slippage when liquidity is thin) | Known in advance — at the limit or better |
| Risk | Slippage and gaps around news releases | No fill when the price turns without touching your level |
| Typical use | Entering a trend, exiting at the stop | Entering at a level, take-profit orders |
Worked out on one example
What do two pips of slippage cost? We use the same formula the pip value calculator teaches.
Example assumptions
- Capital 10,000 PLN (Polish złoty), risk per trade 1%.
- EUR/USD, a position of 10,000 units (0.10 lots), an assumed rate of 4.00 PLN per USD.
- A stop of 25 pips, slippage on the market order of 2 pips.
The arithmetic
- Risk budget 10,000 PLN × 1% = 100 PLN
- Value of one pip 10,000 × 0.0001 = 1 USD; 1 USD × 4.00 = 4 PLN
- Stop of 25 pips 25 × 4 PLN = 100 PLN
- Slippage on entry 2 × 4 PLN = 8 PLN
- Effective risk of the position 100 PLN + 8 PLN = 108 PLN = 1.08% of capital
- Slippage as a share of the risk budget 8 PLN / 100 PLN = 8%
A market order gives up 8% of the risk budget at two pips of slippage. A limit order carries no such cost, but it may not fill at all — so you choose between certainty of execution and certainty of price, not between a good order and a bad one.
The arithmetic rests on the assumptions stated above — it is not a forecast and not market data. Put in your own numbers: Pip value calculator.
This comparison describes differences in mechanics; it does not recommend a choice. The fit depends on your horizon, capital and risk tolerance. Educational content — not investment advice.