Buying good stocks is important thing but buying stocks at right price is also essential. While placing orders for buying or selling one comes across Limit orders and Market Orders. Here we’re trying to understand what “Market Order” is? And some important facts about Market Order.
Definition and Explanation
Market order is a type of order where one wishes to buy or sell scrip immediately at best available current market price. In Market Order execution of order is guaranteed (provided enough depth is available) but price may vary.
While placing Market Order one needs to place specific quantity for buying or selling.
Let’s assume, Participant A wants to buy 100 shares of XYZ company. Stock is trading at Rs. 90. Trader a thinks stock price stock is in a definite uptrend and prices will go up immediately. In this case, placing a market order advisable because he’ll get desired quantity at best possible price.
Difference between market order vs limit order
Market order is which get executed at current market price. Limit Order will only get executed at a specific price.
In market order participant will get/ be able to sell desired quantity but price can shoot up or go down. Where as in Limit Order participant will get/ be able to sell fewer shares but at desired price.
Risks of Market Order
The biggest risk of market orders is the execution at the desired price is not guaranteed. Stock price changes by every minute and second. In market order, One can get desired quantity but price can move and sometimes that’s disadvantage.
One needs to keep a thing in mind while placing Market Orders. Brokerage and other transaction charges are applicable. To check broking charges refer SAMCO’s brokerage calculator.
Other Popular Order Types
- Limit orders
- Stop Loss Limit Orders
- Stop Loss Market Orders
To place market orders with India’s leading discount broker SAMCO, login to the SAMCO Trading Platforms.