Final answer:
A limit order is used to instruct a broker to buy or sell a stock at a specified price, while a market order is executed at the best available price in the market.
Step-by-step explanation:
An instructing to buy or sell a stock at a particular price is known as a limit order. A limit order specifies the maximum price the buyer is willing to pay or the minimum price the seller is willing to accept. If the market price does not reach the specified limit price, the order may not be executed.
For example, let's say you want to buy shares of a company's stock, but you don't want to pay more than $50 per share. You can place a limit order to buy the stock at $50 or lower. If the stock price reaches or falls below $50, your order will be executed.
On the other hand, a market order is an instruction to buy or sell a stock at the best available price in the market. Market orders are executed immediately at the prevailing market price, regardless of the specified price. This means you may end up buying or selling the stock at a slightly different price than what you see at the moment.