An order is an instruction sent to a broker or trading platform to execute a transaction involving stocks, ETFs, or other assets. It specifies key details such as the quantity of the asset, price limits, and the order's duration.
There are various types of orders, but two of the most common are:
Market Orders
A market order instructs the platform to buy or sell an asset immediately at the best available price. While it guarantees execution, the final trade price may vary due to market fluctuations.
Limit Orders
A limit order allows investors to set a specific price at which they are willing to buy or sell an asset. A buy limit order executes only at or below the specified price, while a sell limit order executes at or above it. This ensures price control but does not guarantee execution if the market does not reach the set price.
Understanding order types helps investors align their trades with their financial goals and risk tolerance. Market orders prioritize speed and execution, while limit orders provide greater price control, allowing for more strategic investment decisions.
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