Stock trading refers to the buying and selling of stocks at a time most preferable to buyer and seller. Trade orders aid in allowing easier for easing trading. A market order in stock trading refers to buying or selling an asset at the current market price.
What is a trading order in stock trading?
Trading order describes the different ranges of orders that surround trading exchanges. These orders often find themselves implemented in a variety of scenarios revolving around the exchange of financial assets. Often, contractual or stocks related, trading. The need for varying trading orders lies in the fact they in fact help and encourage traders to maximize the versatility of their own unique trade.
How is an order different from a trade?
An order refers to the intention of buying and/or selling an asset at a certain price, thus the buyer places a request to the seller for the asset at either the current market price or at a specific price. On the other hand, trading simply includes the same request of budget to the seller of the purchase. However in this case the request needs to be executed. In short, a trade occurs. Wherein the buyer and seller have exchanged assets of the same value at an agreed price.
Market Order
A market order involves a trade order to purchase or sell a stock at the current market price. However, the buyer nor the seller sets the price for the purchase or sale of the stock.
Instead, the market sets the price.
On the other hand, a market order includes a high risk of potential slippage in a very fast-moving market. Thus, if a stock gets traded significantly, then the previous trade order being executed before will change the price the next buyer pays. Another important facet of market orders refers to the fact that they fall under the category of day order.
For example, if an investor makes an order to purchase 100 stocks, the investor receives 100 stocks. However, it will be sold at the stock’s offer price.
