Zerodha and many other online brokers don’t allow market order for illiquid stocks. But after checking the orderbook, its evident that some people in the market do get to place market orders, as circled below. How is this possible? Is the blocking of market orders rule of exchange, or or is this just risk management policy of some brokers only? Please clarify!
Broker does that for few illiquid and penny stocks as at time they can have wide spreads, one can place limit order at higher price in these cases which act as almost like market orders.
You can see volume traded is zero in this stock as of now. You can place limit order at upper circuit in these cases if one want definite execution provided enough sellers are there.
No that i do understand why do you do it. Ive read couple of explanations about why do brokers do it and how do we place orders in such cases. My question is different.
It appears that some people are placing market orders as you see in the circle above of orderbook. Hence my question is why is that so?
is it that brokers can indeed allow market orders at their own, but choose not to do so because of their respective RMS?
Does the exchange make it mandatory for all brokers to block market orders or not?
Because if not then it’s pointless for people who are putting limit order at upper circuit as those who put market orders will get first fill.
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Yes, broker RMS decides it, exchange won’t have any restrictions.
No, limit price will get first priority in these cases.
How come? because as per market, market orders get filled first over limit orders. Thats what we all know right, that market order is used for instant execution. Then why do you say that wont be a case in this scenario?
In pre open it is different, limit orders will match with limit orders and gets first priority over market orders, can check this.