Why do Stock Market Orders not get Executed?

Introduction

Usually, when a trader places a stock order in Stock Market, he immediately receives confirmation of the trade, and the trading history is updated. The trade status also gets updated on the Order Book in real-time, and an email confirmation gets sent to the registered account. However, you may face situations wherein your Stock Market Order refuses to get executed even though it was placed successfully. This happens for many reasons. Let us examine them.

The market comes under immense pressure when there is a tremendous demand for a specific stock. There may be multiple bids to buy but no bids to sell the shares. In such cases, your does not get executed for days. Similarly, suppose there is limit order, which is an order to buy or sell a stock at a specific price or better. In that case, the Stock Market Order remains completely unexecuted if there are no matching orders.

For instance, if you place an order to sell 100 shares at Rs. 100 each, the order may remain unexecuted till there are any buy orders for the shares for a price of Rs. 100 or more. Similarly, the order remains unexecuted if the orders received are for a lesser quantity.

The unexecuted order portion gets converted into a limit order at the last traded price. Therefore, if the last traded price of a share was Rs. 100, the unexecuted portion of the market order gets converted into a limit order to sell shares at Rs. 100.

Also, stock exchanges follow a 'price-time priority' principle for processing Stock Market Order. This means that when you receive the orders, a timestamp gets assigned for executing on the 'first come, first serve' basis. So, if other buyers have placed orders before you, yours only gets executed once those are fulfilled.

The time is taken for executing a Stock Market Order also depends on where you place the trade. For instance, a reputed retail broker executes it within a few seconds.  For avoiding this, here is what you can do:

1. Place After Market Order (AMO) as a Limit or a Market order after 3:45 PM. Note that market orders have a higher chance of getting executed.
2. Alternatively, you can place a Pre-market Order before 9:00 AM. The chances of such an order getting executed are higher than an AMO. However, most traders feel that placing an AMO is easier than syncing their schedule with pre-market timings.

Regardless of the method, you consider, remember that there is no guarantee of your order getting executed. It takes a few hits and misses to get your order executed finally. In case of any difficulties, ensure to speak to your broker. So, open a Trading Account and kick off your trading journey right away.