Market If Touched order and limit if Touched Order
What is Market If Touched (MIT)?
Market if touched (MIT) is an order that will be executed only if security reaches (touches) a specific price.
Investors place market if touched order if they wish to delay buying or selling security until its price becomes more advantageous. An MIT buys order is instructed to execute the trade once the security’s market price has fallen to the desired price. MIT sell order is instructed to execute the trade once the market price has risen to the desired price.
For example, suppose a trader would like to purchase 100 shares of stock QWE, but only after the stock price reaches Rs 25 per share. He/she places an MIT order with a broker for these 100 shares. Once stock QWE reaches Rs 25 per share, the broker executes the order.
Why Does Market If Touched (MIT) Matter?
Investors can arrange trades without having to continually monitor a security’s market price in MIT orders. MIT orders (sell orders, specifically) and stop orders are bit confusing though, stop orders instruct brokers to sell a security at a certain point before it sustains further losses in value.
Limit if Touched Order
Through a Limit, if Touched order a trader can buy or sell at a specified price or better, below (or above) the market. This order is held in the system until the trigger price is touched. A LIT order is very similar to a stop-limit order. The only difference is that a LIT sell order is placed above the current market price, and a stop limit sell order is placed below.
Investors can specify a threshold price above or below the going market rate. When that rate is achieved the order will be executed. The investor specifies both the trigger threshold and the limit for the limit order when they place the LIT order. Assets will only be bought or sold if the market rate matches the limit at which they want their broker to buy or sell the assets.
LIT orders allow investors to control the price at which their assets are bought and sold. This is different from market-if-touched (MIT) orders, which instruct brokers to buy or sell assets at the best available price or offer once rates cross the trigger threshold. But MIT does not specify a minimum price you want to receive for your assets or a maximum price you are willing to pay for assets.