What is the difference between Market Order and Limit Order? Which one is wise to use?
To start, MARKET order means you’re telling the market you want ### number of shares, and you’re given them at a price usually somewhere between the ask and bid (ask/bid spread). In a high volume market, it’s pretty safe to do a market order, and if you’re buying for the long run, then saving a few pennies on your order will mean nothing. For long term investments, just do a market order to raise your odds of a quick order execution. REMEMBER – many people forget this, it’s not like you can just buy a stock whenever you want, there has to be a seller to meet your order. In high volume markets, you’re pretty much guaranteed this with a market order. Now, with LIMIT order, you’re telling the market you want ### number of shares at a certain price. This is used more in lower volume markets and lower priced stocks.
Market order will execute your order at the current market price. Limit order is a conditional order, it will get executed at the price specified by you or at a price beneficial to you. As an example, if you place a BUY order for 1000 Nos. of X stock at a limit price of Rs.100, the stock will be bought at Rs.100 or lesser depending on the market availability. Similarly in the case of SELL it will be excuted at Rs.100 or more. It is always better to specify the limit value as sometimes, the order will be queued and may not get executed due to some system delay, then if you had placed the market order, the order might get executed at a price which is not favourable to the investor. I came across one site which is suitable for the beginner in trading, which you can also go through.
Market order is when u tell your broker to sell or buy a share at current prevailing price eg Reliance right now is quoting at 2635 and u tell ur broker to buy/sell at this price or nearit. it is a market price order. suyppose u want to buy at 2630 and your broker puts a bid to buy ,say, 100 shares at 2630. this is limit order.
