JUN 4, 2020 By : ATHUL RAJEEV, VENTESKRAFT
In this blog we will go through Orders used in stock market. We know that financial market is a place where stocks and bonds are traded. It’s the ideal place for companies and governments to raise long-term funds. The financial market includes the trading of securities. Stocks and bonds are the two types of securities where the investments are done. There are financial regulatory bodies in every country that monitor and regulate the transactions in order to protect the interest of investors. SEBI (Securities Exchange Board of India) is the authority that regulates Indian Financial Market.
There are major kinds of order in Intraday Trading such as:
Limit Order :
It’s an order to buy or sell stocks at a specified price. Use of a Limit order helps to ensure that the customer will not buy/sell the stocks at a price less favorable than the limit price. Use of a Limit order, however, does not guarantee an execution. A limit order should have a Time in Force (TIF) value.
Market Order :
It’s an order to buy or sell a stock at the price that is currently available in the market. When you submit a market order, the order can be executed at any price that is prevailing in the market. There is no guarantee in the money that you are going to receive.
Stop Loss Order:
In this order, it allows you to place an order which gets activated only when the last traded price of the share is reached or crosses a predefined price. Stop loss price is also called as trigger price. If you feel that any particular share will be worth buy or sell only after it crosses certain price limits then this type of orders are good.
Stop Loss Market Order:
It’s a special kind of limit order. It is a mixture of stop loss order and market order. A stop loss market order to sell is treated as a market order when the stop loss price or a price below is reached/ touched.In this order, buy is treated as a market order when the stop price or a price above it is reached. The likely danger associated with Stop Loss Market Order is that they will become market orders after the expected price level has been reached, the actual transaction will take place some distance away from the price you had in mind.
Stop-loss limit order
Stop-loss limit order is almost similar to stop-loss market order but it does not get executed at market price.It will get executed at specified limit price set by the trader. In this type of trading order, the trader will have to set a trigger price and a limit price.
After Market Order (AMO)
After market orders are orders that are placed beyond market hours. The normal market hours are between 9.15 am to 3.30 pm.
Bracket Order (BO)
Bracket order is one of the types of trading order in which 3 orders bundled into one. You can enter a new position with a target and a stop-loss. All bracket orders are limit orders. The stop-loss and target will have to be in absolute points(i.e. 1,2,5,10, etc).
Cover order is an order by which we can enter a position along with a stop-loss in a same order form.
Based on Time Duration
Also based on time duration, there can be:
- Good For Day Order – order will stay valid till the end of current trading session.
- Good Till Day Order – by using we can keep our order active for few days.