Stocks in trading have moved from trading ring. Therefore small screen gives you access to thousands of stocks. And they are listed on stock exchange. But you need to take charge of your trades. By checking quotes, placing right order and assessing market breadth. Moreover, see what stop loss in share market is. Hence, check Advantages and disadvantages of the stop loss limit order.
However, beginners start with order in market. Moreover they check quote and place buy order to pick stock at ongoing price. But brokers offer you facilities in form of types of orders. And you can use to your advantage.
Thus market order is used by buy or sells shares at going rate in market. In case of high liquid stocks you can use market orders without much thought. Without impact of cost there is high chance that orders involve small quantities.
You can place market order when market is directional. Probably, trade gets executed when you place market order immediately. And you can take advantage of directional move. Moreover, order takes position at prevailing price in market. Hence, limit order is beneficial when someone wants to accumulate stock at particular level.
In case of liquid stocks limit order work better with large bid. You can place an order with desired quantity and at price you want to transact. But order is valid for day. Hence, see Securities market Introduction
If stock reaches that price in day then transaction is carried out. For example, you want to buy shares of ACC at Rs. 1,770 and currently stock is quoting at Rs 1,800. So you can choose to place an order for desired quantity with price of 1,770 by using limit order.
Probably, traders looking to trade particular stock above or below level choose to use limit order. Almost, order place 80% are limit orders.
Stop loss order
Mostly, traders are worried about positions going awry. And you can initiate position with stop loss.
For example, you want to buy stock at Rs 110 for target of Rs 120 with stop loss of Rs 95. Because, you can buy stock at Rs 100. And immediately place stop loss order to sell stock at Rs 97. In addition, brokers also allow stop loss order. But in points term trader can give trailing stop loss.
In above example, if you have given 5 point trailing stops loss. Then SL will move to 100 when stock goes to 105.Sometimes you can place two order. As stop loss order to sell stock at 97 rupees. And you can sell stock at Rs 120 as profit booking order.
Furthermore, if market is volatile both these orders get executed and you will in problem. In such circumstances you can use Bracket orders. Thus when two orders get executed and other order gets cancelled.
For beginners you can place two orders at one go in bracket order. In above example, you have buy share at Rs 110. You can place two sell orders one at Rs 97 and other at Rs 120. But if any of these order get executed other get cancelled immediately. In case you are gone short on stock at Rs 110. Then you may place stock loss buy at Rs 107 and book profit order at Rs 95 using bracket order.
However, Bracket orders are meant for day traders. And you are looking to make quick money on trade. You need not keep observing trade terminal throughout day. On both sides you must see loss and profit. Hence, your trade is in safe hands.
Time Bound Orders
For day Indian stock exchanges allow you to place an order. And all your pending orders get cancelled at end of day. They are called Good Till Day Orders. But some brokers allow you to place good till cancelled orders (GTC).So placed order remains in broker systems. If you are not executed in same day. Then same order sent to exchange next day. Such orders can be used to accumulate stock.
But you need to keep track of such orders as desired price. You want to buy stock may change over period of time. Sometimes you need not want to buy stock anymore. Such GTC order remains in system then it will surprise you at time you expect it.
Immediate or cancelled (IOC) is type of order that let you trade at that moment in time. Moreover IOC order uses to transact particular quantity of share at particular price. And at particular moments of time.
Trade orders on margin based
But you run short of funds even you have trading ideas. Such trader place order till trade size multiple of their cash balance with broker. And you can place an order 4 times of your balance with broker. For example, if you have 25,000 balance with broker. Then broker allows you to take order value of Rs 1 lakh.
Therefore you can select margin option when you placing an order. You can take an exposure four to five times of money kept with broker. In addition, these orders get squared off by three in afternoon. And your shares will be sold at 3 pm on same day. If you want to carry your position forward then broker charge margin amount in industry.
In addition, some brokers also allow placing basket order. And you can place an order in multiple. You can buy or sell stocks in futures and options contracts. However, these are place through web based and desktop platforms.
Finally, see definition of market order. Therefore see difference between market order or limit order. And you can see market order examples. Probably, for more details see what stop market order is. Hence, see Types of Stop Loss order.