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An order in the stock market is an instruction given by an investor to a broker or trading platform to buy or sell a security under specific conditions. It determines how and when a trade should be executed, whether instantly at the market price or at a predefined level. Orders can be simple, like purchasing shares immediately, or more advanced, such as setting a trigger to buy or sell at a particular price point. They provide investors with flexibility to manage risk, control costs, and plan their trades effectively. Understanding order types is essential for anyone looking to participate confidently in the stock market.
An order in the stock market is an instruction given by an investor to buy or sell a security under certain conditions. These orders decide the price, timing, and manner of trade execution. They can be basic, such as buying a stock at the current market price, or more advanced, involving triggers and limits. For example, an investor may place an order to buy shares at ₹950 even if the current trading price is ₹1,000, ensuring that the purchase only happens when the stock falls to the set level.
A market order is the simplest and most common order type, where an investor instructs to buy or sell a stock immediately at the favourable price. This order prioritises speed over price control. For instance, if a stock is trading at ₹1,000, placing a market buy order will execute instantly around ₹1,000, depending on market liquidity. Market orders are preferred when quick entry or exit is more important than the exact price.
A limit order allows an investor to set the maximum price they are willing to pay when buying, or the minimum price they want to receive when selling. This type of order ensures price control but does not guarantee execution. For example, if a stock is trading at ₹1,000, a buy limit order at ₹950 will only execute if the price drops to ₹950 or below. Similarly, a sell limit order at ₹1,050 ensures the stock sells only when the price reaches or exceeds ₹1,050.
A stop-loss order is designed to minimise potential losses by automatically selling a stock once its price falls to a predefined level. Unlike limit orders, stop-loss orders convert into market orders once triggered. For example, if a stock is purchased at ₹1,000, an investor may place a stop-loss order at ₹900. If the price drops to ₹900, the order activates and sells the stock at the favourable price, protecting the investor from deeper losses. This makes stop-loss orders a valuable tool for risk management.
A robo order is an automated trading instruction that executes based on pre-set conditions without requiring manual intervention. It helps investors participate in trades systematically, even when they are not actively monitoring the market. For example, an investor can set a robo order to buy 10 shares of a stock every time it dips by ₹20 from its current price of ₹1,000. If the price falls to ₹980, the system automatically executes the order. This ensures discipline in trading and removes emotional decision-making.
In India, robo orders are allowed under SEBI regulations, and brokers offering automated trading must ensure compliance with exchange rules and risk management guidelines
An after market order allows investors to place buy or sell orders outside regular trading hours. These orders get queued and are executed when the market opens the next day. For instance, if a stock closes at ₹1,000 and an investor places an AMO to buy at ₹950 at 8:00 PM, the order will be sent to the exchange for execution when trading resumes. AMOs are useful for those who cannot place trades during market hours but still want to plan their investments.
A delivery order, also known as Cash & Carry (CNC), refers to buying shares with the intention of holding them in a demat account for more than one day. Unlike intraday trades, these shares remain in the investor’s account until sold. For example, if an investor buys 100 shares of a company at ₹1,000 each using a CNC order, the ₹1 Lakh investment will reflect as shares in their demat account and can be held for weeks, months, or even years. Delivery trades are used for long-term investment purposes.
A margin order allows investors to trade by borrowing funds from their broker, enabling them to take larger positions than their account balance permits. It involves paying only a percentage of the trade value as margin. For instance, if a broker requires 20% margin and a stock is trading at ₹1,000, an investor can buy 500 shares worth ₹5 Lakhs by paying ₹1 Lakh upfront, with the remaining funded by the broker. This type of order increases exposure and carries higher risk if the stock price moves unfavourably.
An intraday order is meant for buying and selling stocks within the same trading day. It involves opening and closing positions on the same day without holding shares overnight. For example, an investor may buy 200 shares of a company at ₹1,000 each in the morning and sell them later the same day at the prevailing market price. If the position is not squared off before market close, the broker automatically closes it to prevent carry-forward. Intraday orders carry higher exposure to short-term price fluctuations.
An immediate or cancel order is designed to execute instantly, either fully or partially. Any portion of the order that cannot be executed immediately is cancelled. For instance, if an investor places an IOC order to buy 100 shares at ₹950, but only 60 shares are available at that price, then 60 shares are purchased instantly and the remaining 40 are cancelled. This type of order is useful in highly volatile markets where prices fluctuate quickly.
A day order remains active until the end of the trading session. If it is not executed within market hours, it expires automatically. For example, if a stock is trading at ₹1,000 and an investor places a buy day order for 100 shares at ₹950, the order will remain valid throughout the day. If the price drops to ₹950 before market close, the order executes. If the price never touches ₹950, the order expires at 3:30 PM. Day orders are commonly used by investors who want their trades to remain open during the entire trading day.
The stock market offers multiple types of orders for different trading styles and strategies. Market orders provide quick execution, limit orders give price control, and stop-loss orders help manage risks. Advanced types like AMO, CNC delivery, intraday, IOC, and day orders add flexibility by catering to specific needs such as after-hours trading or immediate execution. For instance, an intraday order involves opening and closing positions within the same day, while a CNC order allows shares to be held for a longer period. By understanding the strengths and applications of each order type, investors can select the approach that aligns with their trading preferences.
This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.
A market order is executed immediately at the prevailing price, whereas a limit order is carried out only when the stock touches the specified price set by the investor.
A stop-limit order activates a limit order once the stop price is reached, ensuring execution only within the investor’s defined price range.
A trailing stop is a dynamic stop-loss order that adjusts automatically as the stock price moves, locking in profits while limiting downside risk.
An OCO (One Cancels the Other) order links two orders together, where the execution of one automatically cancels the other.
A Fill or Kill order requires immediate execution in full, or else the order is cancelled without any partial fills.
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