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Market Order Vs Limit Order

1) An order consists of instructions to purchase or sell a security and can be a market order or limit order. 2) A market order executes immediately at the current market price, ensuring execution but without price control. 3) A limit order only executes at or better than the specified price, allowing price control but not guaranteeing execution.

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Jeemol Raji
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125 views15 pages

Market Order Vs Limit Order

1) An order consists of instructions to purchase or sell a security and can be a market order or limit order. 2) A market order executes immediately at the current market price, ensuring execution but without price control. 3) A limit order only executes at or better than the specified price, allowing price control but not guaranteeing execution.

Uploaded by

Jeemol Raji
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Limit Order vs Market Order

Hemant Sharma(M2018)
Jayesh Sonawane(M2019)
Jeemol Oommen(M2020)
What is an Order

• An order consists of instructions to a broker or brokerage firm to purchase


or sell a security on an investor's behalf.
• Fundamental trading unit of a securities market.
• Orders broadly fall into different categories which allow investors to place
restrictions on their orders affecting the price and time at which the order
can be executed.
Types of Order
Market Order

Limit Order

Stop Order

Day Order

Good till canceled (GTC)


Immediate or cancel
(IOC)
All or none (AON)

Fill or Kill (FOK)


Market Order

• A market order is an instruction to buy or sell a security immediately


at the current price.
• The default price type is generally "market." That makes it a market
order.
Pros and cons

Pros Cons
• Market orders are also well suited for • An investor may end up paying a
securities with a high volume of higher price than anticipated.
trade.
• There is almost a 100% chance of an
order to get executed.
• One of the biggest advantages of the
market order is that an investor can
get into the stock at any given time. It
is not required to wait for order
completion.
Example
1. When you call your broker and say, "Buy 10 shares of ABC stock," the broker
will enter the trade as a market order and you will buy ABC at whatever price it
is trading at when the order is fulfilled.
2. Say the bid-ask prices for shares of Excellent Industries are $18.50 and $20,
respectively, with 100 shares available at the ask. If a trader places a market
order to buy 500 shares, the first 100 will execute at $20. The following 400,
however, will be filled at the best asking price for sellers of the next 400
shares. If the stock is very thinly traded, the next 400 shares might be executed
at $22 or more.
Limit Order

• A limit order is a type of order to purchase or sell a security at a


specified price or better.
• For buy limit orders, the order will be executed only at the limit price
or a lower one, while for sell limit orders, the order will be executed
only at the limit price or a higher one.
• This stipulation allows traders to better control the prices they trade.
Pros and Cons

Pros Cons
• A limit order guarantees that an • A limit order is not guaranteed to
order is filled at or better than a be filled, however.
specific price level. • Limit orders control execution
• Limit orders can be used in price but can result in missed
conjunction with stop orders to opportunities in fast-moving
prevent large downside losses. market conditions.
Example

• If you want to buy Tata Motors share at Rs 290. The stock is currently
trading at Rs 296, so you set a limit order to buy at Rs 290. The price
may go up or it may go down, but you know that as soon the stock
trades at Rs 290, your order will be triggered and you'll buy at your
predetermined price.
• Once you buy Tata Motors share at Rs 290, let's say you decide you want
to sell at Rs 300. Again, you place your limit order and wait. Once Tata
Motors share trades at Rs 300, your order becomes active and will sell
at your target price of Rs 300.
Market Order vs Limit Order

Market Order Limit Order


• Only quantity needs to be • Quantity and price both
specified. have to be specified while
• Transaction takes place at placing an order.
live market prices • Orders are executed at price
specified by the investor
THANK-YOU

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