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After opening a demat account and embarking on the stock market journey, many investors struggle to make their first trade, and for one of the weirdest reasons—they don’t understand stock market order types. We thought of addressing this concern through this article.

Topics covered…

  • Trade order types depending on market view 
  • Based on price complexity
  • Advanced orders
  • Stock market order types depending on duration and validity 
  • How to place trade orders intelligently

Let us understand the types of orders in trading. 

Trade order types depending on market view

Buy order: As the name suggests, a buy order is placed when you want to buy a security.

Sell order: A sell order is placed when you want to sell the shares or securities you want to.

Trade orders based on price complexity

Limit order: Indicating a specific price point to be traded at, a limit order can be placed either with a buy order or a sell order.

Market order: This order, too, can be combined with a buy order or a sell order. When you place a market order, you are ready to buy/sell a stock at a price prevailing in the market. When you place a market order, you must keep in mind that your execution price can be different from the price you saw on your screen before entering the trade. Market liquidity affects this order type greatly. Use market orders only on highly liquid counters. 

Stoploss order: When you take a position on either of the sides—buy or sell—you can protect your downside by placing a conditional counter-order (stoploss order) with a trigger price known as a stop-loss trigger price. For instance, when you buy a stock at Rs 100 and can absorb a maximum loss of 10%, you can place a (sell) stop-loss order with Rs 91 as the stop-loss trigger price. If prices fall to this indicated price, the sell trade will be triggered.

Advanced orders

Bracket order: Bracket order is a 3-in-1 order specially designed for intraday traders. It combines a buy/sell order, a stop-loss order and a target order. This order also has an auto-square-off facility if none of the conditional orders gets triggered—stop-loss and target order to be specific. Bracket order helps a trader automate trading decisions. For instance, if a stop-loss order is triggered, then the target order is automatically cancelled. Similarly, if the target is triggered, then the stop-loss order is automatically cancelled.

Cover order: Cover order, a type of intraday order, has two legs—initial trade + stop-loss order. This is less sophisticated as compared to a pure bracket order since it lacks the target trigger. Nonetheless, it can help intraday traders curb losses in case they can’t devote time to trading. 

Disclose Quantity Order: Disclose quantity order is handy when you don’t want other participants to know the exact quantity you want to buy/sell. For instance, you may want to buy 1,000 shares but want to disclose only 200 shares at a time. In this case, you might use the disclose quantity feature. The biggest advantage of combining the disclose quantity feature with a buy order or a sell order is that order execution happens as directed, without each leg getting labelled as a separate trade. 

After-Market Order: You can place this type of order before markets open and after markets close. An After-Market Order is suitable if you want to trade in the pre-opening trading window.

Trade orders based on duration

Intraday Order: Intraday order helps you enter a day trade with or without using leverage. The positions are auto-squared if not exited manually before the closing. An intraday order can be part of either a buy order or a sell order. 

Delivery A delivery order is placed when you want to take the delivery of securities and carry your trade positions. Delivery orders help you add and sell the securities from your holdings and positions. 

Day Order: A day order is valid for a day. If a particular trade isn’t executed during the trading session, the order gets cancelled automatically at the end of the day. 

Immediate-or-Cancel: An Immediate-or-Cancel (IoC) order is placed when you want an order to be triggered immediately. If it is not triggered, then the order is automatically cancelled.

GTT: A GTT order, with a validity of a year, allows an investor to set a trigger price and a target price. The order is then placed with the exchange whenever the asset meets the trigger price within the next year.

Placing trade orders intelligently

  • Identify your trade position—buyer or seller; further, an intraday or a positional trader 
  • Define a price point you want to trade at—place a limit order for a specific price point
  • If you are trading with leverage, never trade without a stop-loss 
  • Always use the disclose quantity feature when executing high-volume trades 


Disclaimer:
The blog is for information purposes only and anything mentioned herein shouldn’t be construed as a fundamental reason to buy/hold/sell any stock. Furthermore, the information provided in the blog and observations made therefrom shouldn’t be treated as the extension of recommendations made on the other properties of Ventura Securities. If you follow any research recommendations made by our fundamental or technical experts, you should also read associated risk factors and disclaimers.
We strongly suggest you consult your financial advisor before making any decision pertaining to your finances. Asset allocation becomes extremely relevant.
We, Ventura Securities Ltd, (SEBI Registration Number INH000001634) its Analysts & Associates with regard to the blog article hereby solemnly declare & disclose that:
 We do not have any financial interest of any nature in the company. We do not individually or collectively hold 1% or more of the securities of the company. We do not have any other material conflict of interest in the company. We do not act as a market maker in the securities of the company. We do not have any directorships or other material relationships with the company.
We do not have any personal interests in the securities of the company. We do not have any past significant relationships with the company such as Investment Banking or other advisory assignments or intermediary relationships. We are not responsible for the risk associated with the investment/disinvestment decision made based on this blog article.

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