How to: Market to Limit vs. Limit

Jessica Amir
August 28, 2020

When placing a buy or sell order on the market, you generally have two options: place a trade on the market at the market price which is most common, or you can place a trade at a set price known as a limit.

Visual depth chart demo: https://youtu.be/gpFUQx_Le_c

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Hi, I’m Jessica Amir, a Market Analyst with Bell Direct. When placing a buy or sell order on the market you generally have two options: place a trade on the market at the market price which is most common, or you can place a trade at a set price known as a limit.

When you are buying on the market at the market price known as market to limit, it means the market will determine the price that you buy or sell at. The alternative is that you could buy or sell at a set price, a limit.

If you’re doing that I strongly recommend that you watch our video on how to look at market depth. We’ll link the video in the description below showing you how to look at depth or the buys and sells.

So, let’s place a trade using both options. Once you’ve logged into Bell Direct you can place a trade from anywhere on the site by clicking trade. So let’s buy BHP at the market price, letting the market set the best possible price. So I’ll key in that I want 150 units. Then click market to limit. If I hover my mouse over the question mark I can see it’s telling me I’ll get the best opposing offer or ask price. This is the highest price that traders are willing to sell their shares at. But if I was selling BHP at the market price, market to limit I get the best opposing bid meaning the best opposing price that someone is willing to buy my shares at.

So we’ll keep it as market to limit meaning the price that you buy at will be based on the price action. It’s really important to note though as the market can move quickly I might get a different price to what’s seen here, but I’m happy with that. It’s also good to know if I was buying or selling a small or illiquid stock and there’s not enough trades in the market, my order might not complete today. The remaining balance of my trade will stay in the market until more buyers or sellers come in so I typically leave my order as the default good till cancelled. Regardless I just want to make sure that my order goes through at the market price.

Alternatively, I could make my order valid for the day, 5 or 20 days or i can set my own date here. I know BHP is one of the most bought and sold stocks on the ASX so I’m pretty confident that my order will go through at the market price. Another reason that I’ll leave it as market to limit. Moving on, let’s say that I wanted to put in a set price or a limit I’d use the market depth to find where the biggest clusters of trades are to increase my chances of my order going through at a set price. If i was buying BHP at a limit, I’d click here and then enter my price limit here.

And that’s it, so when buying or selling you can do it two ways, either at the market price meaning the market will set the limit by clicking market to limit. Remember that’s most common. Or you can set a specified price by clicking the limit price.

For more information see our other demo videos on BDTV or chat to us online.

Happy trading.

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