Types of Order in Stock Market
Investing in stock market notes
There are mainly three types of order which can be made while purchases or sales of securities:
1. Market Order:
A market order is an order to buy or sell a specific security at the best available price. These orders are executed as soon as it reaches the exchange. For a sell order, a market order generally will execute at or near to the current bid price and for a buy order, a market order generally executed at or near to the current ask price.
Example of a market order
2. Limit order:
A limit order is an order to buy or sell a security at the price we have set or better price. The main advantage of this order is that the trade will be executed at a price entered by us or better price.
For Example: If you place a limit order to buy Trident Shares at Rs. 40, you will get Trident Shares at Rs. 42 or lower if available. Again if you place a limit order to sale Tata Power Shares for Rs. 999, you will get Rs. 999 per share for sale or higher if buyers are available at this price.
Example of a Limit Order
3. Stop Loss order:
A stop-loss order is an order to buy or sell a specific stock which is used by investors to limit a loss or protect a profit on a stock that they have bought or short in intraday trade. This order is very useful for intraday traders.
In stop loss order we can also set target above buying price.
Once the target is achieved or stop loss is hit, your position will be automatically squared off.
Example of a Stop Loss Order