Market Order / Limit Order / Stop Order
Different trade instructions for buying or selling securities in markets.
Detailed Description
Market Order / Limit Order / Stop Order
What is a market order?
A market order is an instruction to buy or sell a security immediately at the best available market price.
How does a limit order work?
A limit order specifies the maximum price for buying or minimum price for selling a security and remains open until executed or canceled.
What is the purpose of a stop order?
A stop order is designed to limit losses or protect profits by triggering a market order when a security reaches a predetermined price.
When should an investor use a limit order?
Investors should use a limit order when they want greater control over the execution price and are willing to wait for their target price.
What are the disadvantages of a market order?
The disadvantages of a market order include potential for unfavorable execution prices, especially in volatile markets.