Types of orders in stock market




Now a days, internet has made our life very easy. As an trader or investor buy or sell stocks by yourself directly from where they want. An investor place an order with help the broker who places a request to buy or sell on your behalf.


What is an order?

A order is guidelines for the investors or traders to buy or sell shares on a trading platform or stock broker.

There are different types of orders in store market.

Here are five types of orders that could be placed by a expert.


Types of orders in stock market


(a) Market Order:

A market order is a trading order to buy or sell stocks at current trading price. When traders placed this order is to be executed instantly. An important feature of market order guarantees that will be executed but cannot guarantee the execution price.

For example:

Suppose Current price of ABC stock is Rs 150 and you place market order to buy this stock. Sudden, stock market goes up of Rs 152 coinciding and your order will be executed of Rs 152.

Stock market is volatile, prices fluctuate every second. Price for the last traded in the market may change already when you place your order.


(b) Limit Order:

A limit order is a trading order to buy and sell stocks at a specific set price or better. A limit order helps investors or traders for potentially buying or selling stocks at a price they don't want. There is no guarantee that this order will be executed as opposed to a market order.

For example:

The ABC stock is currently trading at Rs 100 and an trader set limit order to buy 1000 shares at Rs 98. In this case when stock the price hit Rs 98 or lower will the trade execute.

Similarly, the ABC stock is currently trading at Rs 100 and an trader set limit order to sell 1000 shares at Rs 102. In this case when stock the price hit Rs 102 or higher will the trade execute.

The interesting part is that it helps you make sure you don't have to follow stock trends every second to get the right price.


(c) Stop loss Order:

Stop loss order is a trading order to buy or sell stocks when it reaches a specific price is call stop price. Stop loss order also known as 'stop order'. When the specific price is reached, the stop order becomes market order and your order is executed.

Stop loss order save from huge losses. This order very helpful for the day traders.

For example:

An traders is considering selling its position in a stock. When it Current price has dropped from Rs 150 to Rs 145. Traders can place a stop order at Rs 145.  The order will be executed when the stock hits  Rs 145.


(d) Stop Limit Order:

A stop limit order is a trading order that unites the features of a limit and stop order.  When the stocks hits the stop price, the orders becomes limit order. Stop-limit orders, unlike a stop order, guarantee a price limit.  On the other hand, a stop order guarantees the execution of an order but not necessarily at the price of a stop order.

For example:


An investor has a stock trading at Rs 150 and investor wants to sell the stock if it falls below Rs 135 but only the stock can sell for Rs 130 or more. The investor set a limit order a stop price of Rs 135 and limit price of Rs 130. When the stock falls below Rs 135, the order reaches a Rs 130 limit order.

(e) Trailing Stop Order:

A trailing stop order is just like a stop loss order. A trailing stop order is based on a percentage change in the market price versus a specific target price. Generally, trailing stop order is used for a long position and it also be used for short position. So, when an investor will be purchased the stock, it increases by a fixed percentage. 


For example:

An investor buys a stock for Rs 100. Investors set a trailing stop order of 10%. If the stock falls 20% or more, the order will be executed.

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