Limit order
Also called: market order
An order to buy or sell only at a price you set, or better. A market order instead takes whatever price is available right now.
With a limit order you name your price. A buy limit at 500 fills at 500 or lower; a sell limit at 520 fills at 520 or higher. If the market never reaches your price, nothing happens, and the order lapses at the end of the day.
A market order fills straight away at the best price on offer. For large, busy shares the difference is a few paise. For thinly traded small caps a market order can fill well away from the last price you saw.
Example
A share last traded at 202. The best seller is asking 202.50, but only for 30 shares, and the next seller wants 206. A market order for 100 shares could fill 30 at 202.50 and the other 70 at 206 or worse. A limit order at 203 buys just the 30 and waits for the rest.
Watch out
Most shares have a daily price band of 2, 5, 10 or 20 percent either side of the previous close, and orders outside it are rejected. A limit set far from the current price may not even be accepted.
Learn it properly in
Chapter 2.1: How to open a demat account in India, and what happens after you tap Buy