Mark should decide to place a limit order
as he is interested in the shares, but iss not looking at buying over £45. A
limit order and a market order are two options that are available for traders
to use to enter the market, or exit. When it comes to both a limit and market
order, there are many advantages and disadvantages that need to be considered.
The main advantage of a limit order is that
this order guarantees entry to the market at the trader’s specified and desired
A market order is an order to buy or sell
something at its best available price immediately; this form of order
guarantees the trader’s order. However, it is not guaranteed at a specific
Another advantage that a limit order offers
is an assured entry to the market, or exit, is to close at the specific price. Limit
orders can be very beneficial when trading a stock or asset that is traded
thinly, has a wide bid-offer spread or is extremely volatile. However, a risk
of using a limit order is that the order itself might not be placed – this can
occur when the market is rapidly moving when there is a market reversal.