Market Orders
An order that enables you to purchase or sell a stock at the best price available is known as a market order. So if you are placing a buy market order, you have to purchase a certain amount of stock from the exchange at any price that is available at the time. Likewise, if you place a sell market order, you have to sell your stock at any cost that the buyers are willing to offer.
One benefit of market orders is that your trade will get executed immediately as it reaches the exchange if there are buyers interested in your sell market order. At the same time, the instant order comes with the drawback of slippage, i.e., you could be paying relatively more money to buy or receiving less money to sell your stocks.
Limit Orders
On the other hand, the limit order is when you purchase or sell a stock at a price set by you. Let’s say for instance, you place a buy limit order at Rs. 100, you want to buy the stock at Rs. 100 or lower from the exchange. You don’t want to exceed this limit. In the same way, if you place sell limit order at Rs. 200, your goal would be to sell the stock at Rs. 200 or higher.
What makes a limit order so desirable is that you can purchase or sell the order at the price that you want. That being said, there’s always a chance that your order might not get filled partially or completely, if a counter order is presented for some quantity or none at the price that you have set.