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Investors use different types of stock orders to buy or sell shares. Understanding these orders helps in making informed trading decisions and managing risks effectively.
Market Orders
A market order is an order to buy or sell a stock immediately at the current market price. It guarantees execution but not the price. Market orders are typically used when quick execution is more important than the exact price.
Limit Orders
A limit order sets a specific price at which to buy or sell a stock. The order is only executed if the market reaches that price. Limit orders provide control over the price but may not be filled if the market does not reach the specified level.
Stop-Loss Orders
A stop-loss order is designed to limit potential losses. It becomes a market order once the stock reaches a predetermined price. Traders use stop-loss orders to automatically sell a stock if its price falls to a certain level.
- Market Order
- Limit Order
- Stop-Loss Order