What’s The Difference Between Market Order & Limit Order?

Market orders and limit orders are both orders to buy or sell stock — the main difference between the two is in the way the trades are completed. With a market order, you need to complete the trade as quickly as possible and place the order at a market live price in order to buy or sell a contract/stock.

Key Points:

  • Market Order - Place the order at the market live price.

  • Price is not mentioned at the time of placing the order.

  • The order gets executed at the highest quoted price in the market.

  • A limit order is about paying the price you want.

  • Market order type is not advisable always.

Limit Order

In a limit order, you can pre-plan your order to buy or sell at the desired price. This is where you want to buy a stock but you place a limit on how much you are willing to pay.

Go With A Market Order When:

The market is down and you want a quick sell and book a profit. Sometimes when you sell, the market price may go down by 50 to 100 points and we may be able to book a good profit. Likewise when there’s high volatility in the market and if you are about to incur a loss in the position you have taken, you can quickly exit from that position by choosing the square-off option in the market and exit. It’s just like the break you apply when a vehicle comes unexpectedly in front of your vehicle. It can be used as an emergency tool.

 

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