Here is the complete pack of information that will help you in knowing certain strategies of initiating smart investment in the market.
Limit Order in Zerodha
A limit order in Zerodha means buying and selling shares with a limit price. Setting the limit price helps you to buy or sell a share at the given price. As the price of the share reaches the value set by your order is executed, and trade is being initiated.
A limit order is set at a price in which you will buy or sell the order. This is highlighted once you reach the trigger price of the stop loss.
Unlike market price, the limit order is concerned with the consideration that the price is met before the trade is being executed.
It gives an investor control of buying and selling the price of stocks.
Setting a limit order in Zerodha proves to be beneficial when trading of thinly traded or highly volatile stocks or assets is being done.
This lets the investor decide the highest bid price at which the investor likes to sell the order and the lowest price at which he would be willing to accept.
Although it offers many benefits and prevents investors from keeping an eye on the price of the stock or shares he is willing to sell. Also, you can use it to place Zerodha GTT order that comes with the validity of one year and allows you to take or exit the position at the triggered price entered by you.
Among many benefits the biggest one is that Zerodha GTT charges are zero and hence you can trade by paying the brokerage fees on order execution.
Limit Sell Order Zerodha
As already discussed, buying and selling a contract at a specified price is called Limit Order.
*Limit order is always above the current market price while placing the sell order.
While placing a limit sell order Zerodha you give instruction to the broker not to sell the stock or share at the price below the specified price.
Here is a simple example of the limit sell order in Zerodha
Let’s say you buy a particular share at Rs 20 but worry about its declining price, in such case you set a limit order at Rs 18.
So, if even the price goes down you would be able to sell it as soon as the price reaches Rs 18.
Thus the limit sell price prevents the investor from facing loss. However, there are chances that the order gets filled up due to counter order filled at the exchange with the price being specified by you.
Limit Buy Order Zerodha
Buying a Limit Order Zerodha instructs the broker not to go above the specified price.
Buy limit order should be kept below the current market price. This buy price is executed at the price at which the seller is ready to sell order.
As the price reaches the value set, the order gets executed thus intimating the buyer to buy that particular order.
Let’s consider an example of stock whose current market value is Rs 20 per share. This current price is however not acceptable to you.
In such a case you can ask your broker, here Zerodha, to buy the share with the limit order at Rs 16.
If the stock drops to Rs 16.01 and then to Rs 15.95, nothing would happen to you as your limit is being set at Rs 16.
However, if the price keeps going down then the limit order will not be transacted and it gets expire or cancel.
The margin calculator allows you to find the fund that is required to maintain the trading account.
Know the limit order margin and calculate the margin levied while deciding the buy and sell price for your limit order.
Thus, the limit price allows the investor to buy or sell a stock at a specific price. The buy limit order is executed at the price equal to or lower than the limit price while the sell limit order is executed at the price equal to or higher price than the price specified.
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