You’ve been watching a stock for days. The number finally hits ₦40. You tap Buy, and seconds later, your confirmation reads ₦44.
That gap doesn’t just feel surprising. It can feel like something went wrong. Like the platform moved the price on you, or you weren’t paying close enough attention, or you missed something important.
You didn’t miss anything. And nothing went wrong.
What you experienced is one of the most misunderstood parts of investing, and once you understand it, it will never catch you off guard again.
Let’s walk through exactly what happened.
The Price on the Chart Is History: Not a Guarantee
The number displayed on a stock chart is called the last traded price. It simply tells you the price at which the most recent completed transaction occurred, not the price at which shares are available right now.
Here’s an everyday way to think about it:
Imagine you walk into a bakery and ask how much the bread costs. The person at the counter says, “The last customer paid ₦500 for that loaf.” That doesn’t mean there’s still a loaf on the shelf. And it doesn’t mean the next available loaf won’t cost ₦550.
The chart is the same way. It tells you what the last deal looked like, not what’s available to you right now. That difference is where most of the confusion starts.
What’s Actually Happening Behind the Scenes
Every stock on an exchange has something called an order book, a live, constantly updating list of all the buy and sell intentions in the market at any given moment.
Think of it as a negotiation table:
- On one side, buyers are listing what they’re willing to pay.
- On the other side, sellers are listing what they’re willing to accept.
- The exchange matches them when their prices align.
If the last trade happened at ₦40 but sellers have moved to ₦44, then ₦44 is the live reality, even if the chart hasn’t caught up yet. The chart hasn’t updated because no new trade has completed. But the market has already moved.
You can only buy at the lowest price a seller is currently willing to accept. That’s what determines your execution price, not the chart.
The chart shows the last deal. The order book shows the current reality.
Bid, Ask, and the Gap Between Them
Once you understand the order book, two terms become very useful:
Bid: the highest price a buyer is currently willing to pay.
Ask (or Offer): the lowest price a seller is currently willing to accept.
The gap between these two numbers is called the spread. In our example:
- Best Bid: ₦42 (highest a buyer will pay)
- Best Ask: ₦44 (lowest a seller will accept)
- Spread: ₦2
When you place an order to buy, the exchange matches you with the cheapest available seller. So if you place a market order, more on that in a moment, you’ll buy at the best ask price: ₦44.
That’s not an error. That’s how every regulated stock exchange in the world works.
What Actually Happens in the 3 Seconds After You Tap Buy
Let’s make this concrete. Here’s a real-time walkthrough of what happens the moment you place a market order:
Second 0: You tap Buy. The chart shows ₦40.
Second 1: Your order hits the exchange. The system checks the live order book, not the chart.
Second 2: The system finds the cheapest available seller. At this moment, no one is selling at ₦40. The lowest offer is ₦44.
Second 3: Your order is matched with that seller at ₦44. Trade confirmed.
The chart then updates to ₦44, but only after your trade completes. Before that moment, it was still showing ₦40 as the last recorded transaction.
You weren’t tricked. The system just worked faster than the chart could reflect.
Why Prices Can Change So Quickly
Markets are dynamic. Orders enter, adjust, and disappear constantly. In more actively traded stocks, there are many buyers and sellers at any given time, which means prices tend to move in smaller, more gradual steps.
But in less liquid stocks, where fewer people are trading, the order book can be thin. Fewer sellers means the gap between prices can be wider, and when one seller pulls out or adjusts their offer, the next available price can jump significantly. This is especially noticeable in stocks that don’t trade in high volumes throughout the day. This isn’t manipulation. It’s supply and demand playing out in real time.
The less busy the market for a particular stock, the bigger the potential gap between what the chart shows and what you actually pay. This is something worth keeping in mind, especially with smaller or less frequently traded companies.
Market Orders vs Limit Orders: This Is Where You Gain Control
Now that you understand how matching works, here’s the most practical thing you can take from this article. There are two main ways to place a trade, and choosing the right one makes a significant difference.
| Market Order | Limit Order | |
| What it does | Executes immediately at the best available price | Executes only if your specified price (or better) is available |
| Speed | Immediate | Only when the price is matched |
| Price control | None, you take what’s available | Full, you set the maximum you’ll pay |
| Risk of price gap | Higher | Lower |
| Best for | Speed matters more than price | Price certainty matters more than speed |
A market order says: “Execute now at the best available price.” Speed is the priority. You accept whatever the market offers.
A limit order says: “Execute only if I can get ₦40 or better.” Price is the priority. If no seller meets your price, the order doesn’t execute.
Neither is wrong; they serve different goals. If you’re buying into a highly liquid stock and timing matters, a market order makes sense. If you’re buying a stock where the spread can be wide and you want certainty, a limit order puts you in control.
The key is knowing which one you’re placing before you tap confirm.
A Quick Mental Check Before You Buy
Before confirming a trade, pause for five seconds. Are you prioritising speed or price? Is this a heavily traded stock or a quiet one? If price certainty matters here, consider setting a limit. That small pause can make a big difference.
So What Does This Mean for Your Trade?
When your execution price differs from the chart, your order was processed correctly. The chart showed the last traded price. The order book showed what sellers were actually asking. Your market order matched you with the best available seller at that exact moment, and the market had already moved before the chart could reflect it.
That’s standard market mechanics, playing out the same way on every regulated exchange in the world.
Invest With Clarity on Cowrywise
At Cowrywise, we want every trade you make to be an informed one, not a guess.
That’s why you can choose between market and limit orders before placing a trade, review the full order details before confirming, and access educational resources like this one to deepen your understanding.
The next time price certainty matters, consider placing a limit order. You’ll see the option clearly before confirming your trade, and you’ll know exactly what you’re agreeing to.
The more you understand how markets match your orders, the more confident you’ll feel placing them. And that confidence, the kind that comes from actually understanding what’s happening, is one of the most valuable things you can build as an investor.
