Order types of Stock Market
What is an Order Type in Stock market?
When trading at the stock market, you have to specify what order type it is. There are two types of Orders.
1. Market Order
2. Limit Order.
Market Order is nothing but your order will get executed whatever the prevailing price is. For example, if you want to buy a particular stock, then once you place the order it will be executed. But remember there is a negative side in placing this Market Order type. Suppose if the stock you are to buy is trading with high volatality then, you may place the order at one price and while executing the order it will be bought at some other price that was prevailing while your order is getting executed.
Limit Order is that you set the price of a particular stock for trading. When you place the order you set the price for which it should be traded. Suppose a stock is prevailing at a price of Rs 120, and if you want to buy that stock if the price comes to 115, then you set the Limit Order with price as Rs 115. Once the price comes down to Rs 115, your order will get executed. In the case of limit order to buy the investor specifies the maximum price he is willing to pay. In the case of limit order to sell the investor specifies the minimim price he will accept.
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