Market order

Market order is an attribute attached to a buy or sell order, which will allow you to buy or sell a stock at the best available price.

After you create your 'Trading Action Plan', based on your own technical or fundamental research, next step you are going to take is, placing your order with your broker. Before you can start buying and selling stocks, you must know the different types of orders. You must be aware as to which order is appropriate and its implications.

What is a Market Order?

Order to buy or sell at market is a conditional request made to the broker (or the system) to execute the transactions with the immediate best available price, that is the price nearest to the just traded price

This order gets executed immediately at what ever best price available. Here you are not going to specify the price. If you are going to buy a stock, then you will pay the best 'ask' price. If you are selling a stock, you will receive the best 'bid' price.

This order will fill completely, except when the market freezes.

The market freezes at the upper market circuit when there are no sellers, but only buyers. When there are only sellers with out buyers, the market freezes at the lower market circuit.

Market circuit is the two upper and lower prices fixed by the stock exchange, as a percentage of the previous day's closing price, beyond which the prices are not allowed to rise or fall.

When to use a Market Order?

Use this order, if the market is running against you. You have to cut down your loses. With this order you position gets squared with what ever available price.

Some time the market runs so fast against us, that before we type a limit order, the market moves beyond that price. We will be chasing the price in vain. In such a scenario a market order stops further increase of loss.

Here the stock is assured, not the price. Where as in a limit order the price is assured, but not the stock.

When not to use a Market Order?

I do not advice you to use this order for entering a trade. It may take a chunk of your profit or may increase your loss.

Never use this order to trade in illiquid stocks. In this case you will buy at the higher price and sell at the lower price.

Compare Market order with other type of stock trading orders.

  • All or None Order
  • It is a conditional request made to the broker (or the system) to buy or sell a required number of shares at particular price, only if full quantity of shares are available.
  • GTC Order
  • It is a conditional request made to the broker (or the system) to keep the order in system until it gets executed or canceled.
  • GTD Order
  • It is a conditional request made to the broker (or the system) to keep the order in system until it gets executed or till a predetermined date.
  • IOC Order
  • Immediate or Cancel is a conditional request made to the broker (or the system) to execute the transactions immediately or to cancel it.
  • Limit Order
  • Limit Trading Order is a conditional request made to the broker (or the system) to buy or sell a stock at a particular price or at a better price.
  • Stop Loss Order
  • Order at stop is a conditional request made to the broker (or the system) to execute the transactions with the immediate best available price, once the price crosses a predetermined trigger price.
  • Stop Limit Order
  • Order at stop limit is a conditional request made to the broker (or the system) to execute the transactions with the immediate best available price, once the price crosses a predetermined trigger price but with in a predetermined limit price.
  • Minimum Fill Order
  • This is a conditional request made to the broker (or the system) to execute the transactions only when a minimum number of shares are available.
  • One Cancels Other Order
  • This is a conditional request made to the broker (or the system) to execute one of the two orders, which ever meets the required parameter first, and cancel the other.
  • Market on Close Order
  • This is a conditional request made to the broker (or the system) to buy or sell a stock at the closing price.
  • Limit on Close Order
  • This is a conditional request made to the broker (or the system) to buy or sell a stock at the closing price but with in a limit price.
  • Market on Open Order
  • This is a conditional request made to the broker (or the system) to buy or sell a stock at what ever the market opening price.
  • Limit on Open Order
  • This is a conditional request made to the broker (or the system) to buy or sell a stock at what ever the market opening price but with in a predetermined limit price.
  • Market If Touched Order
  • This is a conditional request made to the broker (or the system) to buy or sell a stock at what ever the market price only after the stock trades at particular predetermined price.
  • Iceberg Order
  • This is a conditional request made to the broker (or the system) to buy or sell a large required quantity of stock, but in smaller predetermined quantity.
  • Fill or Kill Order
  • This is a conditional request made to the broker (or the system) to execute the transactions only if the full quantity of shares are available, or else to cancel the order.





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