Order Types

Introduction

Knowing what to buy is only half the job. Knowing how to place the order correctly saves money and protects you from large losses. This lesson explains every order type a swing trader needs in the Indian stock market.

1. Market Order

A market order buys or sells immediately at the best available price.

• Advantage: instant execution.
• Disadvantage: in fast-moving or low-volume stocks, you may get a worse price than expected. This is called slippage.

Example: A stock shows Rs 500. Your market buy order may execute at Rs 500.40 if sellers at Rs 500 are few.

2. Limit Order

You fix the maximum price you will pay when buying, or the minimum price you will accept when selling. The order executes only at your price or better.

Example: You place a limit buy at Rs 498. If the stock never falls to Rs 498, your order does not execute.

Limit orders are the best choice for most swing trades because you control the price.

3. Stop-Loss Limit Order (SL)

A stop-loss order protects you from bigger losses. You enter a trigger price and a limit price. When the stock touches the trigger, your limit order is sent to the exchange.

Example: You bought at Rs 500. You set trigger Rs 480 and limit Rs 478. If the stock falls to Rs 480, a sell order at Rs 478 or better is placed.

4. Stop-Loss Market Order (SL-M)

Only a trigger price is entered. Once triggered, it sells at market price. It guarantees exit but not the price. Useful in fast-falling stocks where an SL limit order may remain unfilled.

5. AMO (After Market Order)

AMO lets you place orders after market hours. They are sent to the exchange when the market opens the next day. Perfect for working professionals who plan trades in the evening.

6. Cover Order (CO)

An intraday order with a compulsory stop-loss attached. It must be squared off the same day.

7. Bracket Order (BO)

An intraday order that includes an entry, a target and a stop-loss together. When one exit hits, the other is cancelled.

Note: Cover and Bracket orders are intraday products, so they are useful for day trades, not for multi-day swing trades.

Product Types: Delivery vs Intraday

• Delivery: shares go to your demat account and can be held for days or years. Use this for swing trading.
• Intraday: positions must be closed the same day or they are squared off automatically.

Order Validity

• Day order: valid only for the current trading day. Unexecuted orders are cancelled at the end of the day.
• IOC (Immediate or Cancel): executes immediately, and any unfilled part is cancelled.

Important Tip for Swing Traders

Regular stop-loss orders are valid only for the day. If you hold a stock for five days, you must place your stop-loss again each day. Placing it as an AMO the evening before is an easy habit.

On GoPocket

The GoPocket app supports Regular, AMO, Bracket and Cover orders. A typical swing trade on GoPocket looks like this: a Regular Delivery Limit buy order to enter, followed by a Stop-Loss sell order to protect the position.

Frequently Asked Questions

Should I use market or limit orders?

Use limit orders for entries and targets. Use SL-M for stop-losses in fast-moving stocks.

Why did my stop-loss not execute?

With an SL limit order, if the price gaps below your limit price, the order may stay unfilled. Keep a small gap between trigger and limit.

Key Takeaways

• Limit orders give price control.
• Stop-loss orders protect capital.
• Use Delivery product for swing trades.

Disclaimer: Educational content only.