Stock trading is easy today and in fact, whatever be your trading instrument you be able to find plenty of information and tools to help you. Take the case of trading bots like Crypto Code for example. These are designed to execute a technical analysis of the trading instrument. The results are used to make decisions about the assets to buy and the ones to sell. To understand the functioning of the market it is good to understand the types of orders that are placed. Navigate here to know more about the most common types of orders that are placed by traders – limit orders and market orders.
What are market orders?
When you have finalized on a stock you wish to buy and the time you wish to leap into the stock you can use market orders. This is where you are not too particular about the exact price at which you would like to buy the chosen stock. Market orders are placed instantly and the exact value at which the stock is bought might be slightly different from the value at which you placed the order. The market price at the time of order execution would be taken into account as your entry price. The order would be placed no matter what the price change is.
Market orders are the most common orders executed. People look for signals or use technical and fundamental analysis to identify the potential stocks for investment. The patterns of the stock price are then studied to understand whether it is a downtrend or an uptrend. Market orders are known to be more likely to be executed as there are no price criteria set.
What are limit orders?
Limit orders, on the other hand, are for the times when you decide the exact price at which you would like to buy a stock. So you automate your order placement process so as to place an order instantly when the price touches the value that you define. So if the stock doesn’t reach that price at all the order would not be placed. This type of order is particularly useful when you are setting a stop loss.
There are some who play with minor changes in prices. Even for the active traders, every small change in the value can have an impact on the trading strategies. So limit orders are beneficial in such cases. And with limit orders, you can simply set the limit and wait for the order to be executed without having to sit and watch the price movements.