Question

can you please explain limit price and stop proce in stocks and how are they different from eachother

Answer 1

The both terms belongs to stock market.

Lets understand it one by one.

Limit Price Order

limit price order

It is an order to buy or sell a security at a specific price . A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher.

Example: An investor wants to purchase shares of XYZ stock for no more than $20. The investor could submit a limit order for this amount and this order will only execute if the price of XYZ stock is $20 or lower.

Stop price order,

It is also referred to as a stop-loss order is an order to buy or sell a stock once the price of the stock reaches the specified price, known as the stop price order. When the stop price is reached, a stop order becomes a market order.

This type of orders are used to limit the losses in the stock market. It plays an vital for every trader and Investor in stock market.

Example: If Mr. X has bought XYZ stock at $ 10 but he want to limit the loss to 2$ then he will place a Stop Loss order of XYZ stock at $8. By placing this order he is restricting his loss to $2.