Stock Orders: Market, Limit, Stop-Loss

Buying a stock isn't just clicking "Buy." You need to tell the broker how to buy. Using the wrong order type can cost you money instantly.

1. Market Order (The "I want it NOW" order)

You buy/sell at the current market price.

• Pros: Guaranteed execution. Instant.
• Cons: You might pay more than you see.
• Scenario: Stock is at ₹100. You place Market Order. By the time it hits the server, price moves to ₹100.50. You buy at ₹100.50.
• Use When: You need to enter/exit URGENTLY.

2. Limit Order (The "I want it at MY price" order)

You set a specific price. The trade happens ONLY if the stock hits that price (or better).

• Example: Stock is at ₹102. You set Limit Buy at ₹100.
• Result: Order stays "Pending" until price drops to ₹100.
• Pros: Price guarantee. You never overpay.
• Cons: No execution guarantee. If price keeps going up to ₹110, you miss the bus.
• Use When: You are patient and want a specific entry point.

3. Stop-Loss Order (The "Save me" order)

A mandatory tool for traders. It limits your loss.

• Scenario: You bought at ₹100. You don't want to lose more than ₹5.
• Stop Loss (SL): Set at ₹95.
• Result: If price drops to ₹95, the system automatically sells your shares. You lose ₹5, but you are saved from a crash to ₹80.

Types of Stop Loss:

1. SL-M (Stop Loss Market): When price hits ₹95, sell at whatever price is available (could be ₹94.90). Guaranteed exit.
2. SL-L (Stop Loss Limit): When price hits ₹95, place a Limit Sell order at ₹94.80.

4. GTT (Good Till Triggered)

A special feature (in Zerodha/Groww) for long-term investors.

• Standard orders expire in 1 day.
• GTT lasts for 1 year.
• Use Case: You want to buy HDFC Bank if it crashes 10%. Set a GTT. Forget it. If it crashes 6 months later, GTT triggers and buys it.

5. Cover Order (CO) & Bracket Order (BO)

Advanced intraday orders.

• Cover Order: Buy + Compulsory Stop Loss. (Brokers give higher leverage/margin).
• Bracket Order: Buy + Stop Loss + Target. (Fully automated trade).

7-Day Action Plan

Day 1: Open your broker app. Find the toggle between "Market" and "Limit".
Day 2: Place a Limit Order for a stock at 1% below current price. Watch it wait.
Day 3: Place a Market Order for 1 share. Check the "Trade Book" to see the exact execution price.
Day 4: Learn to calculate Stop Loss. (e.g., 2% below buy price).
Day 5: Explore the GTT feature. Set a "Buy GTT" for your favorite stock at a 10% discount.
Day 6: Understand "Market Depth" (The list of buyers and sellers).
Day 7: Promise yourself: "I will never trade Intraday without a Stop Loss."

Quiz

💡 Final Wisdom: "Amateurs think about how much they can make. Professionals think about how much they can lose." Use Stop Loss. Use Limit Orders. Be a professional.