A limit order allows you to purchase or sell a stock on the value you have set or a greater value.
In different words, for those who place a buy limit order at Rs 92, you want to purchase the stock from the exchange only at Rs 92 or lower. You do not wish to pay greater than Rs 92. Similarly, for those who place a sell limit order at Rs 95, you want to sell the stock at Rs 95 or greater.
The benefit of putting a limit order is that you may place buy/sell order on the desired value. However, there’s a chance that your order could not get filled partially or completely depending upon if a counter order is available for some quantity or none at the price you’ve specified.
A market order allows you to purchase or sell a stock at the best available value.
If you are putting a buy market order, you wish to purchase a specified amount of stock from the exchange at any price available. Similarly, for those who’re putting a sell market order, you wish to sell your stock at any value buyers are willing to give.
The benefit of market orders is that your trade will execute as quickly because it reaches the exchange if there are willing counterparties i.e. buyers on your sell market order or sellers on your buy market orders. However, the moment order execution comes at the cost of slippage (which means you might be paying slightly extra money to buy or getting slightly less money to sell your shares).
- Limit orders positioned at Rs 0 can be rejected on Kite. Earlier, a limit order at Rs zero was placed as a market order on the exchange.
- Your limit order will get executed as a market order if for your –
- Buy limit order: limit value is greater than the best offer price
- Sell limit order: limit value is lower than the best bid price