Market Orders vs Limit Orders

A stock market is a place that knows no bias. If you are an enthusiastic trader backed up by a powerful trading strategy then you can be assured of great profits. There are multiple strategies that would help you make the decision of buying or selling a stock. But before you work on a strategy to make a decision you should also know about the different types of orders you can place in any exchange. Btc profit is a legit trading robot

  • Market order
  • Limit order
  • Stop loss order
  • Stop buy order

These are the 4 most common types of orders that the market sees. Before you choose a trading platform or a brokerage makes sure that your brokerage allows the many types of orders. Also, understand the difference in fee for each type of order. Except for market order, the other 3 types of orders are automated ones which might attract higher fees in most brokerages.

Market orders

Market orders are the simplest types of orders. It is pretty straightforward- those orders you directly place at the market price are market orders. When you find that the chosen asset has reached the desired level you place an order. This is the case where you are not very specific about the price and you care more about the range of the price. Market orders are placed immediately and they are executed immediately as well. There could be a price deviation present at the time of execution of the order. Traders should thus ensure that they keep in mind the risks, the losses due to the deviation. But one good thing about market orders is that they are executed every time an order is placed and unless there is a high volatility there would only be slight variations in the price.

Limit orders

Limit orders are those that are placed by setting a limit for the order. You automate an order by setting the desired limit. When the limit is grazed by the stock the order is immediately placed. This is one of the most common types of orders. When you perform a thorough technical analysis and come up with a target price for your order you would be placing a limit order. This is about the stock reaching the precise price. It is particularly popular among the day traders. Day traders trade based on tiny price movements. In such instances, even the slightest change in the price while placing the order might cause huge differences. Also, take the case of those placing large volume orders. If the market price change is small when combined with the volume of the order the deviation is exaggerated. For day traders and large volume traders limit orders are handy choices. Limit orders would be executed only if the set value is reached. So if the value is not met till the closing time the order would not be executed. Even if you pick a historic value there is no guarantee that the stock would meet the same value again.

So if buying the chosen stock on a given day is very important then a market order might be a better option in this case. If buying a stock at a given price is very important then a limit order would be a better option.