Types of Orders in Share Market

When every you try to buy or sell any share, you get multiple options for your order. That is “Market Order“, “Limit Order” and “Stop Loss Order“. What is the difference between them? And why do we have these options? So let’s understand the different types of orders are there in the Share Market and the difference between them.

Types of Orders in Share Market

Market Order

A market order is an order to buy or sell shares immediately. This order only focuses only on the “Quantity” you want to buy or sell. Such types of orders gives you assurity that the order will get executed but it doesn’t assure you the price at which it gets executed. Hence the price at which you have placed the order will not be the same at which the order gets completed.

Let’s take an example, you have placed a market order to buy 50 Shares of stock named “StopToExplore“. The current price of the stock is 100 and you thought to buy it at 100. But now, as the order is a market order, it will only focus on the quantity you need and not on the price. So the order gets executed immediately at the price the seller wants to sell. It can be 101 or even 99 but less likely to be 100.

Limit Order

A limit order is an order to buy or sell shares at a specific price. This order focuses only on the “Quantity” and “Price” you want to buy or sell. Such types of orders will get executed only when the conditions are matched until then it remains in a pending state. Such orders give you assurity that you are buying or selling the stock at the price you want.

Let’s take an example, you have placed a Limit Order to buy 50 Shares of stock named “StopToExplore” at a price of 101. The current price of the stock is 100 and you have placed the order. But now, as the order is a limit order, it will wait until it finds a seller to sell the same quantity of stocks at the price you need. Once the conditions are matched your order gets executed and you get your 50 shares at 101.

Stop Loss Order

A stop-loss order is one of the most useful order types as well as one of the most dangerous. The only difference in this and other options is that it only gets activated when the share price reaches the stop-loss price. Post that the order gets converted into a market order and get’s executed.

Hope this has helped you in understanding the types of order available. In case you have any queries then do drop then in the comment section below.