TYPES OF ORDERS

1. Market Order

 Definition: Buy or sell immediately at the current best available price.

 Example:
o You want to buy shares of Company X. The current price is ₹500. A market
order buys the shares right away, likely at or near ₹500.
o Similarly, if you sell shares at market order, they’ll sell at the best price buyers
are offering.
 Key Point: You get speed but not control over the price.

2. Limit Order

 Definition: Sets a specific price at which you want to buy or sell.

 Example:
o You want to buy shares of Company X, but you only want to pay ₹490. You
place a buy limit order at ₹490. The order will execute only if the price drops
to ₹490 or lower.
o Similarly, if you want to sell shares for ₹510, you place a sell limit order.
The order executes only if the price rises to ₹510 or more.
 Key Point: You control the price but may miss the trade if the price isn’t reached.

3. Stop Order (Stop-Loss Order)

 Definition: Sets a trigger price that activates a market order.

 Example:
o You own shares of Company X worth ₹500. To limit your losses, you set a
sell stop order at ₹480. If the price drops to ₹480, the system sells your
shares at the best available price.
o For buying, if a stock is at ₹470, and you think it’ll rise to ₹500, you can set a
buy stop order at ₹490. The buy order activates when the price reaches ₹490.
 Key Point: Protects against losses or helps enter a trade when the price moves in a
desired direction.

4. Stop-Limit Order

 Definition: Combines a stop order with a limit order.

 Example:
o You set a sell stop-limit order with:
 Stop price: ₹480
 Limit price: ₹470
 o If the stock price falls to ₹480, a limit order is triggered to sell at ₹470 or
better. If the price falls below ₹470, the order won’t execute.
 Key Point: Adds price control to stop orders, but it may not execute in fast-moving
markets.

5. Trailing Stop Order

 Definition: Sets a stop price that adjusts as the market price moves in your favor.

Example of Trailing Stop Order:

1. Initial Setup:
o You buy a stock at ₹100.
o You set a trailing stop at ₹5 below the market price (a ₹5 trail).
2. If the Price Increases:
o The stock rises to ₹110.
o The stop price automatically adjusts to ₹105 (₹110 - ₹5).

If the stock continues to rise to ₹120:

o The stop price moves up to ₹115 (₹120 - ₹5).

o Now, if the price falls below ₹115, the order will sell the stock at the best
available price.
3. If the Price Decreases:
o Let’s say the stock drops from ₹120 to ₹115.
o The stop price (₹115) stays fixed.
o If the price falls further to ₹114, the trailing stop triggers, and the system sells
your stock.

Example:

o You buy a stock at ₹500 and set a sell trailing stop order with a 5% trail:
1. If the price rises to ₹550, the stop price adjusts to ₹522.50 (5% below
₹550).
2. If the stock price falls back to ₹522.50, the system sells the shares.
o If the price keeps rising, the stop price keeps adjusting. However, if the price
falls, the stop price stays fixed.

Key Point: Locks in profits while protecting against losses.

6. Day Order

 Definition: Valid only for the current trading day.

 Example:
o You set a limit buy order at ₹490 when the stock is at ₹500. If the stock
doesn’t drop to ₹490 by the end of the day, the order is canceled.
 Key Point: It’s temporary and only applies to the trading day.

7. Good Till Canceled (GTC) Order

 Definition: Remains active until it’s executed or manually canceled.

 Example:
o You place a limit sell order at ₹600 for a stock trading at ₹500. The order
remains active until the stock reaches ₹600 or you cancel it.
 Key Point: Useful for long-term strategies.

8. Fill or Kill (FOK) Order

 Definition: Executes immediately in full; otherwise, it’s canceled.

 Example:
o You want to buy 1,000 shares at ₹500 using an FOK order. If all 1,000
shares are not available at ₹500 immediately, the order is canceled.
 Key Point: Ensures immediate and full execution or no trade.

9. Immediate or Cancel (IOC) Order

 Definition: Executes as much as possible immediately; cancels the rest.

 Example:
o You place an IOC buy order for 1,000 shares at ₹500. If only 600 shares are
available at ₹500, the order executes for 600 shares, and the remaining 400 are
canceled.
 Key Point: Prioritizes speed, allowing partial execution.

10. All or None (AON) Order

 Definition: Executes only if the full order can be filled.

 Example:
o You place an AON buy order for 1,000 shares at ₹500. If only 900 shares are
available, the order remains pending until 1,000 shares are available at ₹500.
  Key Point: Ensures full execution but may delay the trade.

11. Bracket Order

 Definition: Combines a main order, a target order, and a stop-loss order.

 Example:
o You buy a stock at ₹500:
 Set a target order to sell at ₹550 to take profit.
 Set a stop-loss order at ₹480 to limit losses.
o One of these triggers first, closing your position.
 Key Point: Automates both profit and loss management.

12. Iceberg Order

 Definition: Hides the full size of a large order by displaying it in smaller chunks.
 Example:
o You want to buy 10,000 shares but don’t want to reveal the large size. You
place an iceberg order that displays only 1,000 shares at a time.
 Key Point: Reduces market impact of large orders.
Summary of Order Types

Order Type Key Feature Best Use Case

Market Order Instant execution at current price Prioritizing speed over price
Executes at a specific price or
Limit Order Getting a precise price
better
Activates a market order at a Protecting against losses or entering
Stop Order
trigger price trends
Stop + Limit for better price Risk control with specific price
Stop-Limit Order
control limits
Stop price adjusts with favorable Locking in profits during price
Trailing Stop Order
moves swings
Day Order Valid only for one trading day Short-term trading
Good Till Canceled Stays active until executed or
Long-term strategies
(GTC) canceled
Fill or Kill (FOK) Executes fully or not at all Large orders needing immediate fill
Immediate or Cancel Executes partially or fully
Speed with partial fills acceptable
(IOC) instantly
All or None (AON) Executes fully or not at all Ensures no partial fills
Includes target and stop-loss Managing risk and profit
Bracket Order
orders automatically
Hides large order size in smaller Large trades with minimal market
Iceberg Order
portions disruption