Product and Order types
What are limit and market orders?
Limit OrdersLimit orders are used to buy or sell an instrument at a specific price.
Buy Limit Order:
Assume the Current Market Price (CMP) of a share is ₹95. A client wishes to buy when the price drops to ₹90. A buy limit order can be placed at ₹90 and the stock will be bought at ₹90 or lower.
Sell Limit Order
Assume the Current Market Price (CMP) of a share is ₹95. If a client wishes to sell the share when the price is ₹100, a sell limit order can be placed at ₹100 and the stock will be sold at ₹100 or higher.
The advantage of a limit order is that the share is bought at the desired price. However, depending on the availability of a counter order for the specified quantity or price, the order may not be completely filled, resulting in partial execution.
Did You Know?
- Limit orders placed at ₹0 are rejected.
- Limit orders can be executed as market orders.
- Limit orders are valid only for 1 day. To place long-standing orders with a 1-year validity, use Good Till Triggered (GTT) orders.
Market orders are used to buy or sell an instrument at the best available price. A buy market order purchases the share at any price available. Similarly, a sell market order sells the share at any price available. If there are counterparties, market orders can be executed immediately when they reach the exchange. However, because the order is executed instantly, the share may be purchased at a higher price or sold at a lower price.