Is there a significant danger to market orders as opposed to limit orders?
If you want your order to go through no matter what then you should be using market orders rather than limit orders. With limit orders you may get the price you are after or better but you are not guaranteed to get your order transacted. With a market order you are guaranteed to get you order transacted but may get a price inferior to what you were after. Most times this should only be a few cents but can get much larger in a fast moving or less liquid market. You should incorporate this slippage into your trading plan. Maybe a better option for you, if you are looking at + or - 0.5% from the last price, would be to use conditional triggers (stop buy and sell orders) with your market orders. Once the market moves in your direction your conditional order will be triggered and the stock will be bought at current market price. The Key aspect is the risk of market orders;   You should be worried about point 2 & 3 when you are doing market orders. "The risk of market orders depends heavily on the size of the market and the exchange. On big exchange and a security which is traded in hue numbers you're likely that there are enough participants to give you a ""fair"" price. Doing a market order on a security which is hardly dealed you might make a bad deal. In Germany Tradegate Exchange and the sister company the bank Tradegate AG are known to play a bit dirty: Their market is open longer than Frankfurt (Xetra) and has way lower liquidity. So it can happen that not all sell or buy orders can be processes on the Exchange and open orders are kept. Then Tradegate AG steps in with a new offer to full-fill these trades selling high or buying low. There is a German article going in details on wiwo.de either German or via Google Translate"
Stop orders and stop limit orders typically do not execute during extended hours after the general market session has closed. Stop orders are market orders and market orders especially are not executed during extended hours. Although there are exceptions because a broker can say one thing and do another thing with the way order types are presented to customers vs what their programming actually does. The regulatory burden is a slap on the wrist, so you need to ask the broker what their practices are. Orders created during normal market hours do not execute in extended sessions, different orders would have to be made during the extended session. Your stop order should execute if the normal market hour price stays below your stop price. So a stop limit would actually be worse here, because a stop limit will create a limit order which may never get hit (since it is above the best bid best ask) As the comments say it is still arbitrage. Arbitrage has nothing to do with the speed of execution or the type of order placed, it is commonly associated with automated trading but is not limited to it, which might be where the confusion comes in. The speed of execution is important for arbitrage trading because it lowers Execution risk  Here is some reading you might find interesting: They are pretty extensive. Statistical Arbitrage in High Frequency Trading Based on Limit Order Book Dynamics A limit order book model for latency arbitrage. How riskless is “riskless” arbitrage? "What you are saying is a very valid concern.  After the flash crash many institutions in the US replaced ""true market orders"" (where tag 40=1 and has no price) with deep in the money limit orders under the hood, after the CFTC-SEC joint advisory commission raised concerns about the use of market orders in the case of large HFT traders, and concerns on the lack of liquidity that caused market orders that found no limit orders to execute on the other side of the trade, driving the prices of blue chip stocks into the pennies.  We also applaud the CFTC requesting comment regarding whether it is   appropriate to restrict large order execution design that results in   disruptive trading. In particular, we believe there are questions   whether it is ever appropriate to permit large order algorithms that   employ unlimited use of market orders or that permit executions at   prices which are a dramatic percentage below the present market price   without a pause for human review So although you still see a market order on the front end, it is transformed to a very aggressive limit in the back end. However, doing this change manually, by selling at price 0 or buying at 9999 may backfire since it may trigger fat finger checks and prevent your order from reaching the market.  For example BATS Exchange  rejects orders that are priced too aggressively and don't comply with the range of valid prices.  If you want your trade to execute right now and you are willing to take slippage in order to get fast execution, sending a market order is still the best alternative." This is to protect your position in specific highly volatile market conditions.  If the stock is free falling and you only have a stop order at $90, it's possible that this order could be filled at $50 or even less. The limit is to protect you from that, as there are certain very specific times where it's better to just hold the stock instead of taking a huge loss (ie when price is whipsawing). I'm not sure if they're less risky. Maybe I'm being naive, but I feel they're less manipulated.   I wouldn't say I have any hard resources other than dicking around on cmegroup,com. I pay a ton for my daily newsletters so I can't just start forwarding those.   I tend to stay away from strategy books, but Mark Fisher's The Logical Trader is decent. Futures I feel are more of an experience than strategy trade. Especially the spreads. This is where systems come to die. You need to use one of each, so a single order wouldn't cover this:  The stop-loss order could be placed to handle triggering a sell market order if the stock trades at $95 or lower.  If you want, you could use a stop-limit order if you have an exit price in mind should the stock price drop to $95 though that requires setting a price for the stop to execute and then another price for the sell order to execute. The limit sell order could be placed to handle triggering a sell if the stock rises above $105. On the bright side, once either is done the other could be canceled as it isn't applicable anymore. Exchange traded options are issued in a way that there is no counter party risk.  Consider, stocks and options are held in street name. So, for example, if I am short and you are long shares, no matter what happens on my end, your shares are yours.  To be complete, it's possible to enter into a direct deal, where you have a contract for some non-standard option, but that would be very rare for the average investor. "There are two distinct questions that may be of interest to you. Both questions are relevant for funds that need to buy or sell large orders that you are talking about. The answer depends on your order type and the current market state such as the level 2 order book. Suppose there are no iceberg or hidden orders and the order book (image courtesy of this question) currently is:  An unlimited (""at market"") buy order for 12,000 shares gets filled immediately: it gets 1,100 shares at 180.03 (1,100@180.03), 9,700 at 180.04 and 1,200 at 180.05. After this order, the lowest ask price becomes 180.05 and the highest bid is obviously still 180.02 (because the previous order was a 'market order'). A limited buy order for 12,000 shares with a price limit of 180.04 gets the first two fills just like the market order: 1,100 shares at 180.03 and 9,700 at 180.04. However, the remainder of the order will establish a new bid price level for 1,200 shares at 180.04. It is possible to enter an unlimited buy order that exhausts the book. However, such a trade would often be considered a mis-trade and either (i) be cancelled by the broker, (ii) be cancelled or undone by the exchange, or (iii) hit the maximum price move a stock is allowed per day (""limit up""). Funds and banks often have to buy or sell large quantities, just like you have described. However they usually do not punch through order book levels as I described before. Instead they would spread out the order over time and buy a smaller quantity several times throughout the day. Simple algorithms attempt to get a price close to the time-weighted average price (TWAP) or volume-weighted average price (VWAP) and would buy a smaller amount every N minutes. Despite splitting the order into smaller pieces the price usually moves against the trader for many reasons. There are many models to estimate the market impact of an order before executing it and many brokers have their own model, for example Deutsche Bank. There is considerable research on ""market impact"" if you are interested. I understand the general principal that when significant buy orders   comes in relative to the sell orders price goes up and when a   significant sell order comes in relative to buy orders it goes down. I consider this statement wrong or at least misleading. First, stocks can jump in price without or with very little volume. Consider a company that releases a negative earnings surprise over night. On the next day the stock may open 20% lower without any orders having matched for any price in between. The price moved because the perception of the stocks value changed, not because of buy or sell pressure. Second, buy and sell pressure have an effect on the price because of the underlying reason, and not necessarily/only because of the mechanics of the market. Assume you were prepared to sell HyperNanoTech stock, but suddenly there's a lot of buzz and your colleagues are talking about buying it. Would you still sell it for the same price? I wouldn't. I would try to find out how much they are prepared to buy it for. In other words, buy pressure can be the consequence of successful marketing of the stock and the marketing buzz is what changes the price." Probing for hidden limit orders usually involves sending the orders and then cancelling them before they get filled if they don't get filled. With trades actually going through multiple times for small amounts it looks more like a VWAP strategy where the trader is feeding small volumes into the market as part of a larger trade trying to minimize average cost. It could be probing but without seeing the orders and any cancels it would be difficult to tell. edit: I just had another thought; it could possibly be a market maker unwinding a bad position caused by other trading. Sometimes they drip trades into the market to prevent themselves from hitting big orders etc. that might move back against them. This is probably not right but is just another thought. source: I work for an organization that provides monitoring for these things to many large trading organizations. I would say the most challenging fact for this assertion is that HFT firms operate with extremely limited capital bases. For a stock with say 10m shares ADV, even a very large and successful HFT strategy might use a position limit of no more than 5000 shares.  That is to say if you sum up and net the buys and sells for a stock across the day the HFT firm will never exceed 10,000 shares (2x position limits assuming it completely flipped) on a stock that trades 10,000,000 shares on a given day. The high volumes are attained through high turnover, the strategy might trade up to 500,000 shares (or 5% of the volume) attaining a 50x turnover.  But that brings me back to the original point. In the market microstructure literature market impact generally has been found to scale linearly or even sub-linearly for net volume executed.   If I alternate between thousands of 1 lot buy and sell orders, it would be very difficult for me to move the market because the market impact of every one of my buy orders roughly cancels the market impact of my almost exactly equal number of sell orders.   There might be a higher-order mechanism at work, but I'm genuinely curious what you think it might be. How could strategies that attain such small net positions have such out-sized impact on market direction? If you want to make sure you pay at or below a specific price per share, use a limit order. If you want to buy the stock close to the current price, but aren't price sensitive, use a market order. Market orders are typically not a great idea because if you're buying thousands or tens of thousands of shares this can mean a large swing in cost if the market suddenly changes direction. "Your logic breaks down because you assume that you are the only market participant on your side of the book and that the participant on the other side of the book has entered a market order. Here's what mostly happens: Large banks and brokerages trading with their own money (we call it proprietary or ""prop"" trading) will have a number of limit (and other, more exotic) orders sitting on both sides of the trading book waiting to buy or sell at a price that they feel is advantageous. Some of these orders will have sat on the book for many months if not years. These alone are likely to prevent your limit orders executing as they are older so will be hit first even if they aren't at a better price.  On more liquid stocks there will also be a number of participants entering market orders on both sides of the book whose orders are matched up before limit orders are matched with any market orders. This means that pairing of market orders, at a better price, will prevent your limit order executing. In many markets high frequency traders looking for arbitrage opportunities (for example) will enter a few thousand orders a minute, some of these will be limit orders just off touch, others will be market orders to be immediately executed. The likelihood that your limit order, being as it is posited way off touch, is hit with all those traders about is minimal. On less liquid stocks there are market makers (large institutional traders) who effectively set the bid and offer prices by being willing to provide liquidity and fill the market orders at a temporary loss to themselves and will, in most cases, have limit orders set to provide this liquidity that will be close to touch. They are paid to do this by the exchange and inter-dealer brokers through their fees structure. They will fill the market orders that would hit your limit if they think that it would provide more liquidity in such a way that it fulfils their obligations. Only if there are no other participants looking to trade on the instrument at a better price than your limit (which, of course they can see unless you enter it into a dark pool) AND there is a market order on the opposite side of the book will your limit order be instantaneously be hit, executed, and move the market price." Never. Isn't that the whole idea of the limit order. You want a bargain, not the price the seller wants. And when the market opens it is volatile at the most, just an observation mayn't be correct. Let it stabilize a bit. The other thing is you might miss the opportunity. But as an investor you should stick to your guns and say I wouldn't buy any higher than this or sell any lower than this. As you are going long, buying at the right price is essential. You aren't going to run away tomorrow, so be smart.  Probably this is what Warren Buffet said, it is important to buy a good stock at the right price rather than buying a good stock at the wrong price. There is no fixed answer to your question. It can be anything. You can check what analysts, someone with reputation of predicting correctly(not always), say would be the increase/decrease in the price of a stock in the projected future. They do quite a lot of data crunching to reach a price. Don't take their values as sacrosanct but collate from a number of sources and take an average or some sorts of it. You can then take an educated guess of how much you would be willing to pay depending the gain or loss predicted. Else if you don't believe the analysts(almost all don't have a stellar reputation) you can do all the data crunching yourself if you have the time and right tools. Stop order is shorter term for stop-loss order.  The point being that is intended as a protective measure.  A buy stop order would be used to limit losses when an investor has sold a stock short.  (Meaning that they have borrowed stock and sold it, in hopes that they can take advantage of a decline in the stock's price by replacing the borrowed stock later at a cheaper price.  The idea is to limit losses due to a rising stock price.)  Meanwhile, a sell stop order would be used to limit losses on a stock that an investor actually owns, by selling it before the price declines further. The important thing to keep in mind about stop orders is that they turn into market orders when the stop price is reached.  This means that they will be filled at the best available price when the order is actually executed.  In fast moving markets, this can be a price that is quite different from the stop price. A limit order allows an investor to ensure that they do not buy/sell a stock at more/less than the specified amount. The thing to keep in mind is that a limit order is not guaranteed to execute. A stop-limit order is a combination of a stop-loss order and limit order, in that it becomes a limit order (instead of a market order) when the stop price is reached. Links to definitions: Stop order Stop-limit order Limit order Market order Will citizens advice be able to help me, or am I only going to get told to seek legal advice anyway? They are just advisory. i.e. help/guide people. They are not responsible for any outcome. What can I do as I'm not the person who's made payment or been paid, but I also don't want to cause the estate agent lots of work from my mistake, but legally no bank will talk to me anyway. You are right. You estate agent would have to follow-up with banks [which you have already done]. Will I have to seek legal action or the estate agent? Once you follow-up with the Banks and the Ombudsman, you should proceed to legal. Legally if it is a mistake on your part, the beneficiary is NOT entitled to the money and has to refund it. However establishing this takes a while and hence most of the times beneficiary does not pay back the money that is not rightfully his.