Stock Market Order Types Explained | Espresso

What are the Different Stock Market Order Types?

Trading in the stock market is becoming easier with time. Owing to the advancement of technology and everything going online, trading stocks has become simple and hassle-free. You can simply buy and sell stocks from the comfort of your home. A stock market order is a way in which you want your stockbroker to execute the trade in the stock market on the stock exchange.

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When you are buying and selling stocks, the chosen method for the execution of the order is the stock market order type. For example, you might want to purchase the stocks immediately at the current market price; this is called a market order, whereas you can also set a fixed price at which you want your order to be executed which is called a limit order.

Thus, there are many different stock market order types. If you are wondering about the stock market order types, then we have a list that will be helpful for you.

Stock Market Order Types

Here is a detailed list of the stock market order types which will be helpful for you when you start trading in the stock market:

  • Market order

A market order is a simple order in which the order is to purchase or sell the stock immediately at the prevailing market price. In this order, there is a guarantee that the trade will be executed (based on the availability of sellers and buyers), but the exact price is not guaranteed.

For the sell orders, the orders get carried out at the current or near the current bid, whereas for the buy orders, the orders get carried out at the asking price. Market orders are great if you want to enter or exit a trade quickly.

  • Limit order

In a limit order, the investor specifies the price at which he is willing to sell or purchase the shares. If the order is executed, the price at which it happens would be the specified price or a better price. In this type of simple order, the guarantee of execution does not exist.

A sell limit order is the order to sell the shares at a specific price or at a better price, whereas a buy limit order is an order to purchase the shares at a specific price or a lower price.

  • Stop-loss order

A stop-loss order is another simple order that you can place to minimise any losses that may be caused due to price fluctuations in the stock market. It will help you to limit the losses on the trade. The price that you specify in the stop-loss order is the maximum loss or risk that you are willing to bear on the stocks. Stop-loss orders can be market orders or limit orders. 

  • After-market order

An AMO or an after-market order is the type of order that you place when the markets are closed. The time of the stock markets in India is 9:15 am to 3:30 pm. After-market orders are for those investors who are not available during the market hours but want to trade in the stock market.

All stockbrokers in India do not have the facility of after-market orders. Those who do offer the facility have a certain time limit in which the after-market orders can be placed.

  • Cover order

It is a complex order in which two different individual orders are placed at the same time. The first part of the order is a market order, and the next part is a mandatory stop-loss order that is placed within a specific range. Once the execution of the market order takes place, the stop-loss order is placed. A trader cannot cancel the stop-loss order.

This market order type is for the intraday traders as they manage to minimise the chance of unlimited losses by placing this type of order. Once the trader closes their intraday position, the stop-loss order gets cancelled on its own.

  • One cancels the other order

OCO, or one cancels the other is a set of conditional orders in which if one of the orders is executed, the other one gets automatically cancelled. The OCO is a 3-part intraday order which includes:

  • The first one is that you have actually to sell or buy stocks,
  • The second one is to set a stop-loss similar to the case of a cover order
  • The third one is a profit order. In this order, if the stock gets to a specific price in the profit, the order is squared off immediately, and you generate the profits that you wanted to make.

One cancels the other order is a combination of stop-loss and a limit order. When the price reaches either the limit or stop-loss price, the order reaches execution, and at the same time, the other one gets cancelled on its own. Most traders utilise this order to minimise their losses and gain entrance into the stock market.

Conclusion

These are the different stock market order types that you can utilise to trade in the stock market. It is essential to gain in-depth knowledge about the different types of orders before you use them for trading in the stock market. Stock market trading carries risk, and it is essential to understand everything properly before you start trading.

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Frequently Asked Questions

There are many differences between a stock market order and a limit order, and you must understand them carefully before you trade. You must determine your trading objective before you choose which stock market order type is better for you.

Stop-loss, as well as stop-limit orders, are both designed to protect the investors. Stop-loss orders provide a guarantee of execution, and stop-limit orders provide a guarantee of the price.

Here are the after-market order timings:

Type of segment

Timing

Futures and Options

3.31 pm to 12:00 am and 5:00 am to 9:13 am

Equity (NSE and BSE EQ)

4.01 pm to 12:00 am and 5:00 am to 8:58 am

Currency Segment

5.01 pm to 12:00 am and 5:00 am to 8:58 am

MCX Segment

5:00 am to 8:58 am