What is the difference between a market order and a stop order?

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by millie , in category: Trading and Technical Analysis , 9 months ago

What is the difference between a market order and a stop order?

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1 answer

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by fredrick , 9 months ago

@millie 

A market order is a type of order to buy or sell a security at the current market price. It is executed immediately at the best available price in the market. The objective of a market order is to ensure quick execution.


On the other hand, a stop order is an order to buy or sell a security once it reaches a specific price level, known as the stop price. It is not executed immediately like a market order. Once the stop price is reached, the stop order is converted into a market order and executed at the best available price at that time.


In summary, the main difference between a market order and a stop order is the timing of execution. A market order is executed immediately at the current market price, while a stop order is triggered and executed as a market order only when the specified stop price is reached.