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What is Limit order?- Easy explanation [Video]

What is Limit order?- Easy explanation

In this video, you will learn everything you need to know about limit orders.

#limitorder #financialmarkets #wallstreetmojo #marketorder #stockmarket

Chapters:
00:00 – Introduction
00:24 – What is the limit order?
01:25 – Examples
02:27 – Advantages
03:02 – Disadvantages
03:39 – Important points to note
04:09 – Conclusion

(Explained in detail in the video)
What is the limit order?
A limit order is a type of order that we can place in the financial markets, which allows us to buy or sell financial assets at a special price that we can pre-determine.
(Explained in detail in the video)
A buy limit order would be placed by specifying a price level below the current market price. A sell limit order would be placed by specifying a price level above the current market price.

Once the price reaches the specified level, the order will be executed.

(Explained in detail in the video)

Examples
We have taken a couple of examples in the video to help you better understand limit orders. So make sure you watch the examples part in the video.

Advantages
It allows traders to buy or sell stocks or other financial assets at the exact price they want.

Buying or selling through market orders might sometimes be unfavorable in a volatile market. So limit orders protects traders during such market conditions.

It might not be possible for investors to keep track of price movements regularly. So what they can do is they can place limit orders and leave the rest on the price.

Disadvantages
Limit orders do not guarantee that the buy or sell order will go through.

Limit orders are not straightforward orders like market orders. As a result, brokers may sometimes charge more brokerage or fees for limit orders.

Important points to note
There are certain limitations with limit orders in terms of liquidity and execution of these orders.

If you are looking to use limit orders in the financial markets, then do so only after you thoroughly know about it.

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