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Limit Order & Market Order - Buying and Selling of stock, Investing in Stock Markets Video Lecture | Investing in Stock Markets - B Com

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FAQs on Limit Order & Market Order - Buying and Selling of stock, Investing in Stock Markets Video Lecture - Investing in Stock Markets - B Com

1. What is a limit order in stock trading?
Ans. A limit order is a type of order placed by an investor to buy or sell a stock at a specific price or better. It allows the investor to set a maximum price they are willing to pay when buying a stock or a minimum price they are willing to accept when selling a stock. The limit order will only be executed if the stock price reaches or surpasses the specified limit price.
2. What is a market order in stock trading?
Ans. A market order is a type of order placed by an investor to buy or sell a stock at the current market price. Unlike a limit order, which specifies a particular price, a market order is executed immediately at the best available price in the market. The investor is essentially accepting the prevailing market price at the time of placing the order.
3. What are the advantages of using limit orders?
Ans. Limit orders offer several advantages to investors. Firstly, they provide control over the price at which a stock is bought or sold, allowing investors to potentially get a better price than what is currently available in the market. Secondly, limit orders can help prevent emotions from driving investment decisions, as they are executed automatically when the specified price is reached. Lastly, limit orders can be useful for investors who want to set specific profit targets or stop-loss levels.
4. Are limit orders always guaranteed to be executed?
Ans. No, limit orders are not always guaranteed to be executed. If the specified limit price is not reached, the order may remain unexecuted. This can occur if the stock price does not reach the limit price during the specified time frame or if there is insufficient trading volume at the limit price. It's important for investors to monitor the market conditions and adjust their limit orders accordingly.
5. Can market orders be used for buying and selling stocks?
Ans. Yes, market orders can be used for both buying and selling stocks. When placing a market order to buy a stock, the investor is willing to purchase the stock at the current market price. When placing a market order to sell a stock, the investor is willing to sell the stock at the prevailing market price. Market orders are commonly used when immediate execution is desired, without specifying a particular price.
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