Marketable limit order

A marketable limit order is a limit order priced aggressively enough that it executes immediately against the current market, functioning almost exactly like a market order while technically remaining a limit order. A buy order becomes marketable when its limit price is set at or above the current ask, and a sell order becomes marketable when its limit price is set at or below the current bid, meaning the order can be matched right away rather than waiting for the price to move to it.

The appeal is combining the speed of a market order with a built-in price ceiling or floor. An investor who wants quick execution but is worried about a market order slipping to an unexpectedly bad price in a fast moving or thinly traded stock can submit a marketable limit order instead, setting the limit slightly beyond the current quote. The order fills immediately like a market order would in normal conditions, but if the price suddenly gapped further than expected the moment the order arrived, the limit price still protects against paying more, or receiving less, than the investor specified.

The tradeoff is that a marketable limit order is not guaranteed to fill completely if the price moves away before enough size is available at or better than the limit, unlike a true market order, which will keep executing at successively worse prices until fully filled. In practice, for a liquid large-cap stock trading in normal conditions, a marketable limit order and a market order usually produce nearly identical results, the difference only shows up when the market moves unexpectedly in the instant the order is placed.