What is a Limit Order in Stock Market Apps?
A Limit Order is an instruction you give to your trading app to buy or sell a stock at a specific price or better. It will only get executed if the market price matches your limit price. This means you have more control over the price at which your trade happens, unlike a market order that executes instantly at the current price.
Example of a Limit Order
Suppose a stock is currently trading at ₹500. You want to buy it only if it falls to ₹480. So, you place a Buy Limit Order at ₹480. The order will stay open and get executed only when the price touches ₹480 or lower.
Similarly, if you hold a stock and want to sell it at ₹550, you can place a Sell Limit Order at ₹550. It will be executed only when the stock price reaches ₹550 or more.
Key Features of Limit Orders
- Price Control: You set the price you want.
- Conditional Execution: Executes only when the condition is met.
- No Slippage: Unlike market orders, there's no risk of executing at a worse price.
- Useful in Volatile Markets: Helps avoid emotional trades during high price movements.
Why Use Limit Orders?
Limit orders are ideal when you're not in a hurry to execute a trade. They give you better control over your investments. If you don’t want to pay more than a certain price for a stock or want to wait for a target price to sell, limit orders are the way to go.
Advantages of Using Limit Orders
- Strategic Trading: Helps in setting entry and exit targets in advance.
- Budget Management: Ensures you never pay more than you want.
- Discipline: Prevents impulsive buying/selling during market swings.
When Should You Use a Limit Order?
Use limit orders when:
- You expect the stock to reach a certain price.
- You want to buy at a discount or sell at a premium.
- You're placing orders in a low-volume or high-volatility stock.
- You don’t want to sit and watch the market constantly.
Types of Limit Orders in Stock Market Apps
1. Buy Limit Order
You place a Buy Limit Order below the current market price. It executes only if the stock price falls to that level.
2. Sell Limit Order
You place a Sell Limit Order above the current market price. It executes only when the stock price rises to your target level.
How to Place a Limit Order in Stock Market Apps?
Most trading apps like Zerodha, Groww, Upstox, and Angel One follow a similar process. Here’s how:
- Search for the stock you want to trade.
- Click on “Buy” or “Sell”.
- Choose “Limit Order” as the order type.
- Enter your desired limit price.
- Enter the quantity.
- Click “Place Order”.
The order will remain open until it is either executed or canceled.
Validity Options in Limit Orders
When placing a limit order, you can also choose how long the order should remain active:
- Day Order: Valid only for the current trading day.
- GTT (Good Till Triggered): Available in apps like Zerodha; the order stays until your price is triggered.
- IOC (Immediate or Cancel): Executes immediately or gets canceled.
Limit Order vs Market Order
| Feature | Limit Order | Market Order |
|---|---|---|
| Execution Price | At your price or better | At current market price |
| Speed | May take time | Immediate |
| Control | High | Low |
| Best For | Strategic trading | Quick trades |
Limit Orders and Risk Management
Limit orders are part of a smart risk management strategy. They prevent you from overpaying and help secure profits by selling at your chosen price. However, there’s one drawback—
Your order may never get executed if the stock never hits your limit price.
Tips to Use Limit Orders Wisely
- Set realistic price targets based on support/resistance levels.
- Use limit orders in volatile stocks where price swings are common.
- Combine with stop-loss for better control.
- Track stock volume and chart patterns to improve execution chances.
Where to Use Limit Orders in Popular Stock Market Apps
1. Zerodha
In Zerodha Kite, you can easily place Limit Orders through the “Buy” or “Sell” screen. GTT orders are also available for long-term targets.
2. Groww
Groww offers simple UI to place limit orders during market hours. You can also view pending limit orders in the “Orders” tab.
3. Upstox
Limit Orders in Upstox are available under “Advanced Order Types”. You can also use bracket orders with limits for better profit booking.
4. Angel One
Angel One supports limit orders with multiple validity options like Day, IOC, and GTD (Good Till Date).
Common Mistakes to Avoid
- Setting price too far from the market rate.
- Not checking stock liquidity—low volume stocks may never execute.
- Placing limit order without reviewing market trends or news.
- Not using alerts or tracking your pending orders.
Conclusion: Is Limit Order Right for You?
If you're someone who wants to maximize profits and minimize risks, limit orders are a great tool. They give you the power to decide the price you want to trade at. Especially in fast-moving or unpredictable markets, a well-placed limit order can protect your capital and offer better returns.
But remember, your trade will only be successful if the market hits your price. So be strategic, use technical tools, and combine limit orders with a good trading plan.
Final Words
With the rise of online trading platforms, limit orders have become an essential part of smart trading. Whether you're a beginner or a seasoned trader, learning how to use limit orders effectively can help you trade with confidence and better control.
Start using limit orders today to bring discipline and precision to your trading journey!
Disclaimer: This article is for educational purposes only. Stock market investments are subject to market risks. Please do your own research or consult a financial advisor before investing.
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