Orders and Execution

What this unit covers

Learn the real order types, market, limit and stop, and how an exchange matches a buyer to a seller, the mechanics underneath every trade you place.

By the end you will be able to

• Explain that an order is an offer with terms, not a guaranteed transaction.
• Distinguish market, limit and stop orders as speed versus price control trade-offs.
• Choose an order type for a situation based on whether speed or price matters more.

How it starts: The Price That Moved

1. You see a share priced at 842 rupees and tap buy.
2. A few seconds pass before the trade is confirmed on your screen.
3. The confirmation shows 845 rupees, not the price you saw.

Words you will meet

Market order

An order to trade right away at whatever price is currently available.

Limit order

An order that only trades at a chosen price or better, and may not fill at all.

Stop order

An order that sits inactive until a set price is reached, then acts like another order.

Matching

The exchange's process of pairing a willing buyer with a willing seller.

In this module: Market Microstructure

1. Orders and Execution (this unit)
2. Bid-Ask Spread and Liquidity
3. Market Depth
4. Price Discovery