Every order you can send falls into one of two families, and the difference between them is the single most important idea in order flow. A market order demands to trade now and accepts whatever price is available; a limit order names its price and waits. One removes liquidity and moves the market, the other supplies liquidity and holds it in place — and knowing which is which is the foundation of reading who moves price.
Two ways to interact with the book
At any moment the market is a queue of resting orders — buyers stacked below the current price and sellers stacked above it — displayed on the DOM ladder in the diagram. You can join that queue or you can jump it. Joining it means placing a limit order that rests until someone chooses to trade against you; jumping it means sending a market order that trades immediately against whoever is already resting there. These are the only two fundamental choices, and every exotic order type — stops, icebergs, marketable limits — is built from them. Understanding the trade-off between waiting for a price and paying for immediacy is the beginning of order-flow literacy.
The limit order: patience for a price
A limit order specifies the worst price you will accept and then rests in the book at that price, providing liquidity to the market. A buy limit sits at or below the current price and waits for a seller to come down and hit it; a sell limit sits at or above the price and waits for a buyer to lift it. Because it waits, a limit order is passive — it does not move price on its own, it simply adds to the wall of resting size others can trade against. Its advantage is price certainty: you will never pay more than your limit. Its cost is fill uncertainty: the market may never reach your price, or may trade through it so fast that only part of your order fills. Every bid and ask size shown on the ladder is somebody's resting limit order.
The market order: immediacy for a cost
A market order is the opposite bargain: it guarantees a fill but not a price. It executes instantly against the best resting orders on the opposite side, consuming that liquidity as it goes. A market buy lifts the lowest offers; a market sell hits the highest bids. Because it takes liquidity rather than provides it, a market order is the aggressor — it is the only kind of order that can actually push price to a new level. Its advantage is certainty of execution; its cost is the spread, plus slippage if your size is large enough to eat through more than one price level.
Who actually moves price
Here is the crux: price cannot move unless an aggressive market order consumes the resting limit orders at a level. If 400 contracts are offered at a price and market buyers eat all 400, the offer is gone and the next trade must happen higher — price has ticked up. The limit orders defined where the liquidity sat, but the market orders did the moving. This is why order-flow analysis obsessively separates volume traded at the ask (aggressive buying) from volume traded at the bid (aggressive selling): the aggressor side is the side spending money to move the market, and identifying it is the whole game.
The maker-taker distinction and its cost
The two order types map onto the industry terms maker and taker. A limit order that rests makes liquidity; a market order that hits it takes liquidity. On many exchanges the economics reflect this: liquidity takers pay a fee for the convenience of immediacy, while liquidity makers pay less or even receive a small rebate for supplying the resting orders the market needs. Beyond fees, the taker always pays the spread — buying at the higher ask and, if they exit immediately, selling at the lower bid — while the maker earns it. Over thousands of trades this difference is large, which is why high-frequency market-making firms are built almost entirely around providing liquidity rather than taking it.
Marketable limits, stops, and choosing wisely
The clean market-versus-limit split blurs at the edges. A marketable limit order is a limit priced aggressively enough to execute immediately — it acts like a market order but caps how far it will chase, protecting you from a runaway fill. A stop order is dormant until price touches its trigger, at which point it usually becomes a market order, which is why clusters of stops can accelerate a move as they fire. The practical rule is simple: use limit orders when price matters more than speed and you can wait, and market or marketable-limit orders when getting in or out now matters more than a tick or two. Scalpers and anyone reacting to fast news lean on aggressive orders; patient traders and anyone working size lean on passive ones.