Lesson 23: Understanding Buy and Sell Orders
Learn how investors tell the market what they want to buy or sell.
What Is a Buy or Sell Order?
When you decide to buy shares, you need to tell the market what you want to buy. When you want to sell shares you already own, you also need to give an instruction.
This instruction is called an order.
In Zambia, investors can place buy and sell instructions through a stockbroker or through available approved market access channels.
A Buy Order
BUY
You want to purchase shares.
Example
Buy 100 shares of a company at a specified price or according to the selected order type.
A buy order is an instruction from an investor to purchase a certain number of shares.
For example, you might tell your broker that you want to buy 100 shares of a particular listed company.
A Sell Order
SELL
You want to sell shares you own.
Example
Sell 100 shares of a company at a specified price or according to the selected order type.
A sell order is an instruction to sell shares that you own.
For example, you may own 500 shares and decide that you want to sell 100 of them.
Your instruction will specify the shares you want to sell and the relevant order details.
How Does a Trade Happen?
Buyer
Buy Order
Sell Order
Seller
A trade happens when a buying order and a selling order can match under the exchange's trading rules.
LuSE explains that a trade is completed when the trade placed by a buying broker matches the trade placed by a selling broker where the price matches. :contentReference[oaicite:1]{index=1}
What Information Goes Into an Order?
A buy or sell order contains important instructions. The exact fields can depend on the broker or trading platform.
| Information | Example |
|---|---|
| Company | Selected listed company |
| Action | Buy or Sell |
| Quantity | 100 shares |
| Price / Order Type | K10 limit order |
| Duration / Conditions | Depending on order selected |
What Is a Market Order?
A market order is an instruction to buy or sell shares at the market price.
The actual execution price may depend on the available matching orders in the market at the time the order is processed.
This means the price you see before placing the order may not always be exactly the price at which the whole order is executed.
What Is a Limit Order?
A limit order lets you specify the price at which you want to buy or sell.
Simple Example
Suppose a share is currently showing around K10.
You decide that you only want to buy it at K9.50 or another price you specify.
You can place a limit buy order at your chosen price, subject to the order being matched and the applicable market rules.
Buy Limit vs Sell Limit
BUY LIMIT
You specify the maximum price you are prepared to pay for the shares.
SELL LIMIT
You specify the minimum price at which you want to sell the shares.
The important idea is that the price instruction works differently depending on whether you are buying or selling.
Sell limit: "I don't want to sell below my chosen price."
What Is a Stop Order?
A stop order is another type of order described by LuSE. It uses an approximate or trigger price.
When the specified price is reached, the stop order becomes a market order according to the exchange's rules.
For beginners, the most important thing is to understand the difference between a market order and a limit order first.
Your Order May Not Be Filled Immediately
Imagine you place a limit order to buy 1,000 shares at K10, but sellers are only offering shares at K11.
Your order may not match at that moment because the price you specified and the available selling price are different.
Depending on the order conditions, your order may remain active, be cancelled or expire.
What If Only Part of Your Order Matches?
Example
You want to buy 1,000 shares at K10.
But only 400 shares are available from matching sellers at the required price.
Depending on the order conditions selected, part of the order may be executed and the remaining quantity may stay active or be cancelled.
This is why investors should understand the conditions attached to their order.
How Long Does an Order Stay Active?
An order does not necessarily stay in the market forever. Its duration can depend on the time-in-force instruction selected.
Day Order
Generally remains active for the trading day, subject to market rules.
Good Till Date
Remains active until a specified date, subject to the applicable rules.
LuSE trading procedures include time-in-force options such as Day Order and Good Till Day. :contentReference[oaicite:3]{index=3}
A Simple Zambian Example
Imagine You Want to Buy Shares
You have researched a listed company and decide that you want to buy 200 shares.
You tell your broker or use the available approved trading platform to enter the order.
You select the company, choose BUY, enter 200 shares and provide the required price and order conditions.
The order is then handled according to the market's trading rules and can be matched with a suitable selling order.
Before You Press Buy or Sell
Take a moment to check your order carefully.
- Am I selecting the correct company?
- Am I choosing BUY or SELL correctly?
- Is the number of shares correct?
- Is the price correct?
- Have I selected the correct order type?
- Do I understand the order conditions?
- Have I considered commissions and other charges?
- Do I have enough available funds if I am buying?
- Am I selling shares that I actually own?
Lesson Complete!
Well done! You now understand the basic idea of buy and sell orders.
A buy or sell order is an instruction. A trade is completed when compatible orders are matched according to the market's rules.
Always understand the price, quantity, order type and conditions before submitting an order.
Buying and selling shares may sound complicated when you are new to the stock market. In reality, the basic idea is quite simple: a buy order tells the market that you want to purchase shares, while a sell order tells the market that you want to sell shares you own.
When investing through the Zambian stock market, an investor can give instructions through a stockbroker or use an available approved market-access channel. LuSE explains that a trade is completed when a buying order and selling order match under the relevant trading conditions.
But placing an order does not always mean that your trade will happen immediately. The result can depend on the price you choose, the number of shares available from other investors, the type of order and the conditions attached to it.
For example, suppose you want to buy 100 shares at K10. If a suitable seller is available at the required price, your order may be matched. If sellers are asking for a higher price, your order may not be executed at that time.
In this lesson, you will learn the difference between buy and sell orders, how orders are matched, and the basic difference between market, limit and stop orders. You will also learn why an order may remain unfilled, why only part of an order may be executed, and what you should check before submitting an order.
The goal is not to encourage you to trade quickly. The goal is to help you understand what actually happens when you tell the market to buy or sell shares.