The stock market isn’t the easiest place to navigate – especially those who are new to it and / or have limited knowledge on the same. There are a number of factors that need to be considered each time you buy stock including just how good of a stock it is and whether the price charged is viable or not i.e., understanding whether or not the price of the stock is good. Investors and traders alike may choose to enlist the services of a professional stockbroker who is responsible for their investment portfolio. Open a Demat account today such that you can better apply what has been discussed below.
What is a Limit Order?
- Investors and traders may assign their stockbroker with specific instructions pertaining to buying or selling stock providing a certain price of their specification prevails.
- Limit orders, for instance, dictate that stock be bought or sold at a certain price or one superior to that. While this price can be assured, the execution pertaining to sale or purchase is not. Limit orders are visible by the market.
- Limit orders help investors indicate to their stockbrokers that the prevailing market price of the stock in question isn’t desired by them.
- In the case of buying, orders are executed below or at the price dictated in a limit order (i.e., buy limit order).
- In the case of selling, orders are executed at or above the price dictated in a limit order (i.e., sell limit order).
Things to Remember -
It is important to bear in mind that when placing a limit order there is no certainty indicating that the order will in fact be executed. While it is possible to gain control of how the price plays out in your favor, there is no guarantee that you are able to attain the quantity of stock you desire. Take for instance if there exist pending orders prior to yours, there is a possibility that your order might not be executed in its entirety if at all.
Demat account opening is easy and can allow you to trade securities from the comfort of your home. It is important to do due diligence prior to making any buy, sell or hold decisions pertaining to securities you might have your eye on. This preliminary research can reduce the potential of your incurring any risks and / or losses and can potentially allow you to accrue greater returns. Now that you have a better understanding of what a limit order is and how to buy and sell with it, you can look at market conditions, your financial goals and assess your risk tolerance prior to making use of said limit orders.