Limit Order Vs Market Order

Limit order

Limit Order refers to the buy or sell order with a limit price.In Limit order there is a cap on the buy price or the sell price.Lets explain it with an example –

Reliance limited is currently trading at Rs. 1025.You want to buy it below Rs. 1020 level and want to place a order at the moment.

So you place a limit order with buy price as Rs.1020 and trigeer price at 1021.

Now the Order remains pending till the price is above Rs.1021.

Once it comes to Rs.1021 level your order is place in the market and once stock price reached to 1020 the order is executed as well.

You might get the price below 1020 depending on the market price but in no way it’ll be more than the Limit Price 1020.

However if the stocks price does not reached the trigger price level (In the example 1021 ) the order might not be placed as well.

Vice versa is the case with Limit Sell order.Limit order can be used to set stop loss(we’ll try to explain Stop loss concept in another article)

Market Order

In Market Order the order is executed as you place the order and the stocks are brought or sold at the market price.So if you place the order when the stock is trading at 1025, your order will be executed and you will get almost the same price.

Limit Oder VS Market Order

Limit Order Market Order
You have to specify the buying or selling price. You do not have to specify any price and order is executed at market price.
Order is submitted when the price level reaches trigger price Order is submitted instantaneously and executed as well.
Can be used to set stop loss. Cannot be used to set stop loss.

 

10 Responses to Limit Order Vs Market Order

  1. Shridhar says:

    What is the difference between Placing an order & buy/sell?

  2. panky says:

    hi sir please suggest me or demo me to buy and sell shares and how can we place order for intra day and delivery trade

  3. Rajat says:

    Sir, in limit order… what will happen if I set a trigger price of stock and it has not reached to that price for a long time… And I want to cancel that… Could I cancel it… Or I have to wait until it is reached to the trigger price

  4. syed sohail says:

    thanks for sharing such a wonderful information which is much useful for beginner traders. bt i would like to know further when STPLMT is used for buying and would you share us the article how to sell in intrading and more about stop loss..
    thanks
    sohail

  5. roshan says:

    hello sir
    i am still confusion about limit and stoploss

    in this picture when i looking buy a stock there is stop loss function. is it needed?

  6. rajiv ranjan kumar says:

    very useful information.

  7. abhishek says:

    really,
    a site that is very helpfull for me………….
    thanks a lot

  8. Samir says:

    VERY GOOD AND WELL DEFINED SITE. HELPS BEGINNERS A LOT. KEEP IT UP.

  9. Saurabh says:

    Its usefull article

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