loader2
Partner With Us NRI

Types Of Stock Trading In The Market

INTRODUCTION:

What is order?

Trading in the stock market has become easy for investors today. In the age of the internet, you can trade your stocks online, in the comfort of your home. Similar to online shopping, you can now place an order for buying or selling stocks. That is called order. Therefore, an order is an instruction given by you—either to your broker or the trading portal. It is the method through which you execute buying and selling your stocks.

WHAT ARE THE TYPES OF ORDERS IN THE STOCK MARKET?

It is imperative to know the basic types of order in the stock market. Knowing the types will allow you to make a well-informed decision about your investment. It will also help you to learn more about the market. It is a guided technique on when and how to place orders in the stock market. If you wish to invest in the stock market, it is essential that you first know about the basic types of orders available. Here are some of the basic types of orders you should know.

·  Market Order:

Market order allows you to buy or sells shares immediately. It buys or sells shares at the current price of the market. It gets executed at a current near bid, which is the best available price.

·  Limit Order:

Limit order allows you to set a pre-determined price. Thus, you can fix an exact “limit” to your order. It is the limit at which you can buy or sell your shares. Unlike market order, the execution is not immediate. It is executed only when it reaches the fixed limit.

Watch video: https://www.icicidirect.com/knowledgecenter/video/equity/market-order-vs-limit-order

·  Stop Loss Order:

Stop Loss order allows you to reduce your losses, especially in day trading. It sets a limit at which you can stop your loss. The market keeps changing daily, which may result in heavy losses. Thus, by setting up a stop loss to your order, you can exit the position when you’ve reached the specified limit to avoid incurring heavy losses.

However, these are just the three basic types of stock orders in the market. There are a few others you should know:

·  After Market Order (AMO):

After Market Order allows you to trade after the market hours when it is closed. All you need to do is place your order at the share price you wish to buy or sell. It will automatically get executed at the market hours. This type of order is suitable if you do not have time to trade during market hours.

·  Cover Order (CO):

Cover Order allows you to trade two orders at the same time. You can place a market order along with a stop-loss order.

·  Good till Cancelled Order (GTC):

Good till Cancelled Order allows you to trade until it gets fulfilled or cancelled. You can also set an expiry period for the period of execution.

·  Immediate or Cancel Order (IOC):

Immediate or cancel order allows you to execute your trade immediately or else it gets cancelled. IOC may result in partial execution. At such times, your remaining order will stand cancelled.

·  Bracket Order (BO):

Bracket Order allows you to trade in 3 orders. It comprises three order types: a buy/sell order, a target order, or a stop-loss order.  Thus, you can place a bracket order of buying at Rs 50, a target to sell at Rs. 100 and then set a stop loss at Rs. 40.

CONCLUSION:

Stock trading is inherently risky. Knowing about the order types in the stock market will help you decide which order is best suitable for you. With it, you can minimize losses and achieve the trading price as desired. Based on your time frame, investment goals, and risk-taking capacity, you must trade your shares in the market.

Disclaimer:

ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.

Most Popular

  • 21 Jun 2022
  • ICICI Securities

Should you invest in Mutual Funds SIPs or FDs?

Choosing between a Systematic Investment Plan and a Fixed Deposit comes down to risk appetite and investment goal. Nevertheless, mutual fund SIP investments can be beneficial in many ways. This article will outline the difference between the two investment instruments and which one you should choose.

  • 21 Jun 2022
  • ICICI Securities

How to choose the best SIP investment?

Systematic Investment Plans (SIPs) are an option to make regular investments in mutual funds. Before heading to make an investment in SIP mutual funds, consider these factors to find the one that perfectly justifies your financial goals. 

  • 21 Jun 2022
  • ICICI Securities

How does long term capital gains tax impact you?

Certain assets, such as real estate and shares, attract long term capital gains (LTCG) tax. Here’s what you need to know about LTCG tax and how it can impact your finances.

  • 21 Jun 2022
  • ICICI Securities

Choosing between stock market and fixed deposit investments

Choosing the right investment option is critical for meeting personal financial goals. This article will highlight the difference between choosing stock market investments and fixed deposits—the aspects to consider, the risk-return profile, and what would fit into your portfolio.

  • 21 Jun 2022
  • ICICI Securities

Are Small-Cap funds good investments?

The best small-cap funds outperformed large-cap and mid-cap mutual funds last year. Now that the markets are turning bearish, is it a good idea to invest in small-cap mutual funds? Here’s an overview of these equity mutual funds to help you make an informed decision.

  • 17 Jun 2022
  • ICICI Securities

What Does the US Fed's Biggest Rate Hike Mean?

On 15th June 2022, the US Federal Reserve hiked interest rates by 75 basis points, the biggest hike since 1994. Why did it do so? What are its implications for India? Read on to find out more.

  • 15 Jun 2022
  • ICICI Securities

What is ESG investing and everything you need to know about it

In the last few years, since climate awareness and social justice have piqued people’s interest worldwide, ESG investment has increased. This article talks about ESG investing and the options available for ESG investment in India.

  • 15 Jun 2022
  • ICICI Securities

The Latest ESG Reporting and Framework in India

In May 2021, India introduced a new environment, social, and governance (ESG) guideline for the top 1,000 listed companies by market capitalisation. The Business Responsibility and Sustainability Report (BRSR) will be mandatory for these companies from FY 2022-23. Here’s what you should know about this ESG guideline.

  • 15 Jun 2022
  • ICICI Securities

Difference Between ESG and SRI Investing

When it comes to value investing, the two terms—ESG investing and SRI investing—are often confused. However, ESG investing strategies are different from SRI investing strategies. Read more to find out what sets the two apart and how you can decide which approach to adopt.

  • 14 Jun 2022
  • ICICI Securities

Four ways to ensure you leave your children a financial legacy

It is a moment of pride for parents to see their children earn their own money and lead a life with dignity. No words can express the joy to see your children grow, but how do you touch their life when you are gone? You can do that by leaving behind a financial legacy for your children to inherit. Here are four ways you can align your financial plan such that you leave behind something for your children.