Understanding Limit and Market Orders When Selling Shares in ICICI Direct and Other Trading Apps
In every trading platform, there are two options available for placing orders: Limit Price and Market Price. Understanding the differences between these two types of orders is crucial for effective financial management and trading in the stock market.
What is a Market Order?
A Market Order is an order that will be executed at the current market price the moment it is placed. This means it will buy or sell a security at the best possible price available in the market at the time of placing the order. For example, if you place a market order to sell shares of Reliance at a price of ?1465, it will be executed at the current market price, which may be slightly higher or lower than ?1465, depending on the market dynamics at the time of the order.
What is a Limit Order?
A Limit Order
Limit Order allows you to set the price at which you want to buy or sell your shares, regardless of the current market price. When the market price reaches the price you set, your order becomes activated. If the market price does not reach the set limit, the order remains inactive until the desired price is reached or the order is canceled. For instance, if you place a limit order to sell Reliance shares at ?1455, and the stock price goes below ?1455, your order will be successful. However, if the stock price does not reach ?1455, your order will not execute.
Selling Shares in ICICI Direct and Other Trading Apps
When you want to sell your shares through ICICI Direct or similar trading apps, you have the option to choose between a Limit Price and a Market Price order. If you want to sell shares urgently, you might choose the Market Order, as it will allow you to sell your shares at the market price on the same day the order is placed. On the other hand, if you want to ensure a specific price, you can place a Limit Order at the limit price you desire.
Why Choose a Limit Order?
Choosing a Limit Order can benefit investors who want to buy or sell at a specific price. This ensures that they do not have to worry about adverse market movements or volatility that could impact their transaction. For example, if an investor thinks that a stock will drop in price, they can place a limit sell order at a specific price, ensuring that they get a better deal than the market price at the time of the order.
Steps to Place an Order
1. **Log in to ICICI Direct or the trading app of your choice.** 2. **Navigate to the trading section and select the stock you want to sell.** 3. **Choose the order type.** - For selling urgently, select Market Order. - For a specific price, select Limit Order and set the price limit. 4. **Review the order details and confirm the transaction.** 5. **The order will be executed based on your chosen type and price settings.**
Conclusion
The choice between a Limit Order and a Market Order when selling shares in ICICI Direct or other trading apps is a critical decision. Understanding the differences can help you make informed trading decisions and potentially secure better transaction prices. Whether you prefer the convenience and immediacy of a Market Order or the control of a Limit Order, this knowledge can significantly impact your trading outcomes.
Keywords: ICICI Direct, Limit Order, Market Order, Trading App, Stock Selling