Market Order & Limit Order

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 market live price in order to buy or sell a contract/stock.

Key points:

Market Order - Place the order at 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

Limit order is about paying the price you want

Market order type is not advisable always

Video Link

How to place Market Order in Enrich Webhunt?

Market Order Enrich

Here the price is not mentioned at the time of placing the order. For instance, I’m going to buy Bharti Airtel at the market price. I have chosen the script and I click buy and I choose market order here. Here I will not be able to set a price or trigger price. I can only mention the quantity required and my order gets executed when I click buy. But the point to note here is, the order gets executed at the highest quoted price in the market.

Market Order Enrich

If you want to view the price, open the market depth over here….when you open market depth of bharthi airtel, you will be able to view the price of the first five buyers and first five sellers. So my order will get executed at the highest price quoted here by the seller.

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

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

You can see that the price of bharti airtel in the market currently is at 593.1.

Now I may want to buy when the price reaches 590…I click buy and click limit order and I set my price as 590…I can choose the quantity I want over here….so when I click buy my order will remain pending and my order will get executed when the sellers come in at 590 . This is how limit order works.

Limit Order Enrich

However, market order type is not advisable always.

Go with a market order when:

The market is down and you want a quick sell and book a profit. Sometimes when you sell, 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 during an emergency tool.

Limit Order Enrich

However, limit order is not advisable in such a market. For instance, if the current market price of a script is 200 rupees and my target is 203….here when I buy I will set my price at 199 in the limit order..so I will be able to buy only when it reaches 199…but in the market the price hits 203 from 200 directly …so the price would reach my target but the order will not get executed because I had set the limit at 199….so it’s not advisable to place the limit at a short difference. If you want to place a limit order, there should be a minimum difference between the market price and the price you are going to buy. Otherwise, it’s best to buy at the market price and book your profit.

Another important point to note is the buy above and sell below calls in future segment. Many are not aware of how to use this option. When such calls come you must place these orders as fresh orders. Such limit orders must be placed as stop loss buy orders or stop loss sell orders.

For instance, let’s take bharthi airtel again. Sell below 550…. I click sell here …Stop loss…remember you cannot place this order in cnc… sell below, buy above can only be placed in intraday.

So I have set the price at 549 and trigger price is set at 549.10. Now when the trigger price of 549.10 gets activated in the market my order gets pushed in the market. Buy above is just the opposite of this process.

Limit Order Enrich

Again we take bharti airtel for easy understanding. Buy above 600….here I click buy…I choose MIS and click SL…I set the price at 601 and the trigger price is set at 600.90. When the trigger price of 600.90 gets activated in the market my order gets pushed in the market.

Stop loss buy and stop loss sell orders are both important in the market. For instance, there’s a sell below 200 in the market, now when this price breaks in the market, a selling pressure is created in the market….and the market would go down quickly…so here if we think of the selling after the price break, we may not get that order as the market will also not wait for us till we decide to sell. So it’s better to place the stop loss buy or stop loss sell before you start your trade.