Sure! Here’s a clear explanation of Market Order vs Limit Order in the stock market:
Market Order vs Limit Order
When you buy or sell stocks, you use different types of orders to tell the broker how you want your trade to be executed. The two most common types are market orders and limit orders.
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Market Order:
A market order is an instruction to buy or sell a stock immediately at the best available current price. It guarantees that the order will be executed quickly but does not guarantee the exact price. Market orders are useful when you want to enter or exit a position quickly, especially in highly liquid stocks. For example, if you place a market order to buy 100 shares, you will get the shares at the current market price, whatever it may be at the moment of execution. -
Limit Order:
A limit order tells your broker to buy or sell a stock only at a specific price or better. For a buy limit order, the order will execute only if the stock price falls to or below the limit price you set. For a sell limit order, it will execute only if the stock price rises to or above your specified price. Limit orders give you control over the price but do not guarantee that your order will be executed if the market price never reaches your limit.
Summary:
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Market order = Buy/sell immediately at the best price.
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Limit order = Buy/sell only at your specified price or better.
Market orders prioritize speed, while limit orders prioritize price control.