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Originally Posted by junior
market order is that it gets the the lowest best price available so how can we get a ridiculous price.
Also another question is that whether to do intraday in MOIL or take delivery of shares purchased that day for rally up to Christmas and new year?
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Market order will get you the best price, but
the best price can be anything - 700,800 or even 1000.
1000s of orders will be sent to the exchanges exactly at 9:15 AM.
Any big buy/sell on opening can take the price a level which you didn't anticipate.
I will give you an example:
Suppose someone wants to buy 2 lac shares and he thinks a market order will get him the shares at less than Rs 750 per share.
His judgment may be right, but he makes a mistake and instead places an order of 20 lac shares.
Such a large order will cause an abnormal price move as there won't be many sellers at opening.
Such things are not common but can happen.
Quote:
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A voluminous freak trade in the index heavyweight, Reliance Industries (RIL), caused a sharp fall in the stock which had a ripple effect on the broader market on Tuesday. The incident was reminiscent of what happened early last month in the US markets, where the Dow Jones, the most widely-tracked index globally, dropped 900 points in a major sell-off, partly attributed to a punching error by a trader.
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RIL tanks after freak trade, sends Sensex crashing.
Imagine what must have happened to all the
market sell orders that were placed just after the above order?
All those trades must have got executed at much lower rates than anticipated by the sellers.
Similarly, if your market order reaches the exchange just after a big market buy order takes the price to 4 digits, your order may get executed in the same price range too.
The risk is not just from freak trades. There is a also a risk of temporary disbalance due to too many market buy orders.
You won't be the only one placing market orders.
Hundred of other traders will be doing the same. In absence of adequate supply of shares, these market orders can take the price to any level.
If you think 800 is the maximum price you want to pay, place a buy order at 800.
Such a limit order (at 800) will also give you the best price (provided it is less than 800), without any additional risk.
As for your question to whether to take delivery or not, I can't answer that right now as I don't know at what price MOIL will close on the listing day.
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