Placing a ‘market’ order gives your dealer permission to buy or sell stocks for you at whatever the price for the stock is at the time.
On the other hand, placing a ‘limit’ order gives you more control over the price your salesperson or dealer buys or sells at, but your order may not be filled right away.
A limit order allows you to set a price limit for the stock your salesperson is trying to buy or sell for you. You will not end up paying more than the limit. If you’re selling some of your stock, the order will go through at or above the price you set, so you’ll never end up selling your stock for less than you expected. If the price of the stock is not within your ‘limit order,’ you may not end up buying or selling the stock at all.
Types of Limit Orders
You can increase your chances of the order going through by placing a certain type of limit order. For example, a ‘day’ order can be placed, but is only good for the day the order is entered. When an ‘open’ order is placed, it is good for a maximum of 30 days, or a GTC (good till cancelled) order can be placed, and is good until it is cancelled by you.
Orders will only be processed if you either have money in your brokerage account, or have arranged for a margin account which allows you to borrow money from the dealer for part of your investments.
If you buy a stock, the value of your investment will increase or decrease depending on a variety of factors that can affect the price of the stock, including the well-being of the company, the economy and the amount of stock available to be traded.