Understanding Stock Orders#

Every trade requires an order. Understanding order types is fundamental to executing trades effectively.

Order Types#

1. Market Order#

• Executes immediately at the best available price
• Guaranteed execution, not guaranteed price
• Best for: Liquid stocks, when speed matters

2. Limit Order#

• Executes only at your specified price or better
• Guaranteed price, not guaranteed execution
• Best for: Setting precise entry/exit points

3. Stop-Loss Order (SL)#

• Triggers when price hits your stop price
• Converts to market order once triggered
• Best for: Protecting against losses

4. Stop-Loss Limit Order (SL-L)#

• Like SL but converts to limit order instead
• More control but may not execute in fast markets

5. Bracket Order (BO)#

• Combines entry + stop-loss + target in one order
• Auto-cancels remaining legs when one executes

6. Cover Order (CO)#

• Entry order with compulsory stop-loss
• Higher leverage due to defined risk

Order Validity#

• Day Order: Valid for the trading session only
• IOC (Immediate or Cancel): Execute immediately or cancel
• GTC (Good Till Cancelled): Valid until explicitly cancelled
• GTD (Good Till Date): Valid until a specific date
• AMO (After Market Order): Placed outside market hours

Practical Tips#

1. Always use limit orders for illiquid stocks
2. Never place market orders during volatile openings
3. Use bracket orders for intraday to manage risk
4. Place AMO the night before for next-day execution