The proliferation of digital technology has made share trading in India easy and convenient. Whether you are engaging with a broker or managing your share trading online through a trading account platform, it is vital to understand the mechanics behind buying and selling stocks, primarily different types of share trading orders and when to execute them. Understanding the share trading orders will help you trade stocks more effectively because you can align your purchase and sale per your investing style.
Here is everything you should know about share trading orders:
Published on 01 March 2023
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What is a share trading order?
A trading order is an instruction to a broker or exchange (in case of direct market access) to purchase or sell a security on the investor's behalf. Orders are typically used to buy and sell securities, such as stocks, currencies, futures, commodities, bonds, options, etc.
You can place a share trading order over the phone with your broker or use an online trading platform to execute your trade. Once you place a share trading order, it follows the defined process of order execution and instructions.
What are the different types of orders applicable when share trading in India?
TWhether you are trading through a broker or using an online trading account, you have an option to choose a share trading order per your requirement.
Here are some types of orders you should know when share trading in India:
Market order: market order is a simple instruction to the broker or the trading platform to buy or sell a security at current market prices. A market order is executed immediately, provided there is a seller or buyer as needed to complete the transaction. Market order guarantees the execution of the order but not the price at which the share is traded.
For instance, you place a market order to buy stocks of X company, which is currently trading at ₹150 per share. In this case, your order is executed immediately, but there is no guarantee of the share price. This is because the market is volatile, and the share prices fluctuate every second. Market orders help to enter or exit the trade quickly.
Limit order: limit order is an instruction to buy or sell a security at a specific price or better. In a buy limit order, you are instructing a purchase at a given price or lower. In a sell limit order, you define sale at a given price or higher. There is no guarantee that a limit order will be executed. For instance, if you place a limit buy order for a security at Rs. 100, this means that you will purchase the asset at ₹100 or lower. However, if the price of the asset remains above ₹100, your limit order is not executed. A limit order helps you automate your share trading online. These share trading orders are valid for a day, a week, a month, or more.
Stop order:This type of share trading order means that a security is bought or sold only at a defined price benchmark. The order is not active until the asset hits the price value. Once the level is attained, the stop loss order functions as a market order. For example, you are holding shares of company X bought at ₹50. However, the share price is dropping, and you wish to sell the shares when they reach ₹45 in value. In this case, a stop-loss order at ₹45 is useful.
Cover order: In this type of share trading order, two orders are placed simultaneously - market and stop-loss order - to reduce the risk of unlimited loss. Once the market order is executed, the stop-loss is placed when the stock trade closes its intraday position. Also Read: What is Covered Call in Option Trading?
Bracket order: This order combines different orders, allowing you to automate the security's sale and purchase. You can place a market order while simultaneously book profits and cover losses. These share trading orders are valid only for a single day.
These are the main types of share trading orders. Since each order involves different complications and instructions, the charges levied differ according to the trading account you use. Hence, when investing in shares, choose a trading platform that offers reliable services, prompt support and minimal fee charges to maximise your stock market profits.
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To be a successful share market investor, you need to understand various investment options available to you like shares, bonds, debentures, etc. Of these, shares offer an opportunity to earn good returns on your investments. However, before you start your journey as a share market investor, it is important to understand what you are investing in.
Sensex and Nifty are two words that have become synonymous with stock markets in India. Even people who are not active stock investors are aware of Sensex and Nifty as stock market indices.
When you start investing in the stock market, you come across various terms and jargon that can seem overwhelming. Two of the most basic terms used are the BSE Sensex and Nifty. While a quick online search will tell you that these are stock market indices, in this article, we will attempt to decode them for you to help you gain a comprehensive understanding. Let’s begin with some basics.
Market orders allow you to enter and exit the market instantly because these orders are executed immediately. However, there is no guarantee of the share price. In the case of a limit order, your sale or purchase happens only when the share price hits the specified price. Limit orders do not guarantee execution but assure the price.
Bracket share trading orders are only valid for a particular day.
If you are a retail investor, you can buy and sell the same stock on the same day up to four times in a five-day share trading period.
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What are Shares and Types of Shares?
To be a successful share market investor, you need to understand various investment options available to you like shares, bonds, debentures, etc. Of these, shares offer an opportunity to earn good returns on your investments. However, before you start your journey as a share market investor, it is important to understand what you are investing in.
Sensex and Nifty are two words that have become synonymous with stock markets in India. Even people who are not active stock investors are aware of Sensex and Nifty as stock market indices.
When you start investing in the stock market, you come across various terms and jargon that can seem overwhelming. Two of the most basic terms used are the BSE Sensex and Nifty. While a quick online search will tell you that these are stock market indices, in this article, we will attempt to decode them for you to help you gain a comprehensive understanding. Let’s begin with some basics.
Market orders allow you to enter and exit the market instantly because these orders are executed immediately. However, there is no guarantee of the share price. In the case of a limit order, your sale or purchase happens only when the share price hits the specified price. Limit orders do not guarantee execution but assure the price.
Bracket share trading orders are only valid for a particular day.
If you are a retail investor, you can buy and sell the same stock on the same day up to four times in a five-day share trading period.
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