What is Limit order ?

What is Limit order ?

Unlike market order ,limit order allows you to place an order in a security at the price of your choice. This means when you buy a share using this order type you have the freedom to choose the price at which order gets executed in market. So when you buy a share using limit order the amount you mentioned in orderbox , either it will get executed at that price or lower than that price . Similarily for a sell limit order means you wish to sell the security at the limit price or higher. As a matter of fact there is no guarantee that this order will get executed, unlike Market Orders.

Let us understood this through an example.

Suppose you place a buy limit order for a stock at Rs 80, it means that you are ready to buy the stock at a price equal to or lower than Rs 80. In like manner, a sell limit order for a stock at Rs 80 means that you would like to sell the stock at Rs 80 or at a higher price .

Given these points this type of orders transform your trading to a certain point. As an authority you can decide the price at which you want the order to get executed . However these orders can stay in your order book but does not get executed .As the price of security does not come at or below the price mentioned by you . If you want to learn basics of share market click here .

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