What are the types of orders?

What are the types of orders?

There are several types of orders that traders can use to enter or exit a trade in financial markets. The most common types of orders include:  

Market order

A market order is an order to buy or sell a stock at the best available price. It is the most simple and frequently placed order.

Examples-

Log into the Swastika trading app, on mobile or web, or call Swastika to buy or sell shares of a particular stock. The order will be executed immediately.  The price paid depends on the trading price of the stock bought while placing the order.  

Stop limit

A stop-loss order helps to limit a trader’s loss with the most control if the market moves in the opposite direction of the trader. Stop order helps in minimizing losses.

Examples-

a) Buy-stop order

Let's say you want to buy some stock in Bharti Airtel Limited, which is currently trading at ₹309 per share. If you think the price will keep going up but you still want to buy the stock, you can use a special kind of order called a buy-stop order. This means that you set a target price of, let's say, ₹350 per share. If the stock price reaches ₹350, your buy-stop order will be activated and you will buy the shares at that price. This way, you can make sure that you buy the shares only when the price is going up and not when it's going down.

 

b) Sell-stop order

Suppose you have some shares of Bharti Airtel Limited, which are currently trading at ₹309 per share. You've decided that you don't want to keep the shares if the price falls below ₹250. To make sure that you don't lose too much money if the price drops, you can use a type of order called a sell-stop order. This means that you set a target price of ₹250 per share. If the stock price drops to ₹250 or below, your sell-stop order will be activated and the shares will be sold at the current market price. This way, you can ensure that you sell the shares before the price drops too much.

Limit order

A limit order is an order to trade a specific set of stocks at the limit price or better.  This means if you set a price to buy, you will never buy gold at a price higher than you have set a limit for. If you sell gold, you will never sell gold below your set selling price limit.

Examples-

a) Buy limit order

You want to buy the shares of Tata Chemicals, which is trading at ₹600 a share. You'll buy if it drops to ₹550, so you place a buy limit order with a limit price of ₹550. The order will only execute at or below your ₹550 limits.

b) Sell limit order

You own Tata chemicals stock which is trading at ₹550 a share. You'll sell if the price rises to ₹580, so you place a sell limit order with a limit price of ₹580. The order will only execute at or above your ₹580 limits.

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