You can place various types of orders when you try to buy or sell a stock. It can be an order to trade at any price or an order to buy at a particular price etc., Let us see in detail what are the various order types and how could you best use them.
Limit Orders : A limit order allows you to buy or sell a stock at the price you have set or a better price. In other words, if you place a buy limit order at Rs 100, you want to buy the stock from the exchange only at Rs 100 or lower. You don't want to pay more than Rs 100. Similarly, if you place a sell limit order at Rs 105, you want to sell the stock at Rs 105 or higher. The advantage of placing a limit order is that you can place buy/sell order at the desired price. However, there is a chance that your order may not get filled partially or completely depending upon if a counter order is available for some quantity or none at the price you’ve specified.
1. Any Limit orders placed will be checked against the daily price range of that security. If the limit order is below the lower end of the daily price range or above the higher end of the daily price range, then such limit orders may be rejected by the system.
2. Your limit order will get executed as a market order if for your -
Buy limit order: limit price is more than the best offer price
Sell limit order: limit price is less than the best bid price
Market Orders: A market order allows you to buy or sell a stock at the best available price. If you're placing a buy market order, you want to buy a specified quantity of stock from the exchange at any price available. Similarly, if you're placing a sell market order, you want to sell your stock at any price buyers are willing to give. The advantage of market orders is that your trade will execute as soon as it reaches the exchange if there are willing counterparties i.e. buyers for your sell market order or sellers for your buy market orders. However, the instant order execution comes at the cost of slippage (which means you could be paying slightly more money to buy or getting slightly less money to sell your stocks).
Stop Loss Orders: A stop-loss order is a buy/sell order placed to limit the losses when you fear that the prices may move against your trade. For instance, if you have bought a stock at Rs 100 and you want to limit the loss at 95, you can place an order in the system to sell the stock as soon as the stock comes to 95. Such an order is called 'Stop Loss', as you are placing it to stop a loss more than what you are ready to risk.
There are 2 types of Stop-Loss orders:
1. SL order (Stop-Loss Limit) = Price + Trigger Price
2. SL-M order (Stop-Loss Market) = Only Trigger Price
Case 1 > if you have a buy position, then you will keep a sell SL
Case 2 > if you have a sell position, then you will keep a buy SL
In Case 1, if you have a buy position at 100 and you wish to place an SL at 95.
a. SL-M order type - You will place a Sell SL-M order with trigger price = 95.
Here, when the price of 95 is triggered, a sell market order will be sent to the exchange and your position will be squared off at market price.
b. SL order type - You will place a Sell SL order with price and trigger price. Since your order needs to be triggered first, the (trigger price ≥ price.) Here, this order type gives you a range of the Stop-Loss.
Let's assume a range of Rs 0.10 (10 paisa). Here, you can keep trigger price = 95 and price = 94.90. When the price of 95 is triggered, the sell limit order is sent to the exchange and your order will be squared off at the next available bid above 94.90. So, your SL order may get executed at 95 (or higher) or 94.95 but not below 94.90.The disadvantage of this order is that if the market falls steeply, then after 95 is triggered and before the Sell Limit order of 94.90 is sent to the exchange if the stock price is already below 94.90, then your Stop-Loss order will still be open and your losses could be much higher.
You will have to use your discretion whether to use SL or SL-M depending on the market scenario.
In Case 2, if you have a sell position at 100 and you wish to place an SL at 105.
a. SL-M order type - You will place a Buy SL-M order with trigger price = 105.
Here, when the price of 105 is triggered, a buy market order will be sent to the exchange and your position will be squared off at market price.
b. SL order type - You will place a Buy SL order with price and trigger price. Since your order needs to be triggered first, (the trigger price ≤ price.) Here, this order type gives you a range of the stop-loss.
Let's assume a range of Rs.0.10 (10 paisa). Here, you can keep trigger price = 105 and price = 105.10. When the price of 105 is triggered, the buy limit order is sent to the exchange and your order will be squared off at the next available offer below 105.10. So, your SL order may get executed at 105.05 or 105 but not above 105.10.
Alternate use of SL order:
Since Sell SL orders are used above your buy price and Buy SL orders are used below your sell price, you can use these order types to Buy above LTP (Last Traded Price) and Sell below LTP.
1. To buy above LTP, you can place a Buy SL order with the price at which you want to buy.
2. To sell below LTP, you can place a Sell SL order with the price at which you want to sell.
Read more about "How Best to put a stop loss here"
After Market Order (AMO)
You can place orders for the next trading day using the AMO feature on Rocket. This is especially helpful for people who can’t actively track the markets during the live session - 9:15 am to 3:30 pm.
All AMO received will be sent to the NSE/ BSE in equity cash market segment at 9 a.m when market pre-opens and at 9.15 a.m for equity derivatives. All AMO in commodity and currency segment is sent at 9 a.m. We send equity cash market AMOs at 9 a.m at pre-open session itself as the orders placed at pre-open session gets higher priority on execution than normal orders placed at the time of normal market opening. For more details click here
AMO orders are allowed for all product types (CNC/MIS) except for BO/CO. You will also not be able to place stop loss orders using AMOs. Read this article on our Blog to learn more about AMOs.
Immediate or Cancel order (IOC)
IOC (Immediate or Cancelled) allows a user to buy or sell a security as soon as the order is released into the market, failing which the order will be removed from the market. Partial match is possible for the order, and the unmatched portion of the order is cancelled immediately. IOC orders are only used when placing orders in very large quantities.
Good till Cancelled order (GTC) - For Commodities.
The GTC order is more popular among savvy commodity traders and hedgers who are willing to wait longer to get the price of their choice. This GTC order will be open till the time the trader placing the order actually cancels the order or the order gets automatically executed. Remember, all GTC orders will automatically stand cancelled on the expiry date.
Good till date orders (GTD)- For Commodities
Good-Till-Date (GTD) order is a slight variant of the GTC order. The only difference is that in a GTD order, the date is specified in advance and if the order is not executed by that data then it stance automatically cancelled. A GTD order can only be placed on a date that is prior to the expiry data of that particular contract.