30-Day Stock Market Series
Day 4 of 30
Order Types Explained: Market, Limit, Stop-Loss & More
Placing an order incorrectly can cost you money before the trade even starts. Day 4 masters every order type used in Indian markets.
The 4 Core Order Types
1. Market Order (MO)
Executes immediately at the best available price. You prioritise speed over price control. Risk: slippage in illiquid stocks.
WarningNever use Market Orders for small-cap or illiquid stocks. You may get filled at a price 2–5% away from where you expected.
2. Limit Order (LO)
You set a maximum price to buy or minimum price to sell. The order executes only if the market reaches your price. Ideal for most retail trades.
3. Stop-Loss Order (SL)
Automatically triggers a sell if price falls to a set level. Protects your capital. Two variants:
- SL-Market: When triggered, sells at market price
- SL-Limit: When triggered, places a limit order at your specified price (risk of non-execution in fast falls)
4. After Market Order (AMO)
Place orders after market hours (3:30 PM – 9:00 AM). Useful for working professionals who can't watch the market during the day.
Validity Types
DAY Order
Valid only for the current trading session. Automatically cancels at 3:30 PM if unfilled.IOC (Immediate or Cancel)
Executes immediately for whatever quantity is available, cancels the rest.Practical Example
# Scenario: Buy Infosys, currently at ₹1,610
# Strategy: Buy on a dip to ₹1,580, protect with SL at ₹1,540
buy_limit_order = {
'type': 'LIMIT',
'side': 'BUY',
'price': 1580,
'qty': 10,
'validity': 'DAY'
}
stop_loss_order = {
'type': 'SL-M',
'side': 'SELL',
'trigger_price': 1540,
'qty': 10
}
Bracket Order (BO) & Cover Order (CO)
Advanced order types available on platforms like Zerodha for intraday:
- Bracket Order: Simultaneously places an entry, stop-loss, and target — all in one click
- Cover Order: Entry + compulsory stop-loss. Brokers offer higher margin leverage on these
Today's Rule
For delivery investing: always use Limit Orders. For intraday: use Bracket Orders. Never enter a trade without a pre-defined Stop-Loss.