Stock Market Order Types

In the stock market, an order type in share market refers to the manner by which your broker executes your buy/sell order. Market orders and limit orders are the two most prevalent order types. For example, you may choose to buy a stock instantly at the current market price (market order) or set a price for your order to be executed (limit order).

Other advance order types include cover order, bracket order, and good-till cancelled order. In this article, we will see what is order type in stock market and what is SL in stock market, along with a detailed look at various types of orders to help you manage your trades effectively.

What are the Different Stock Market Order Types?

When trading in the stock market, understanding the different types of orders is crucial to executing trades that align with your investment strategy. Each order type serves a specific purpose, allowing investors to manage their trades effectively. They are as follows.

1. Market Order

• A market order is an order designed to be executed at the earliest to either purchase or sell a stock at the most suitable current price in the market. It lacks the strategy in terms of price and is used in order to fill an order quickly, though not necessarily at any specific price. 
• Example: You place a market order to buy 8000 shares of XYZ. You end up buying them for ₹100, 102 and 103 for 3000, 500, and 1500 shares respectively if that was the supply of shares at those prices.

2. Limit Order

• A limit order refers to an order for buying or selling a stock at a particular price. It is executed only at the limit price or better. The order will remain unfulfilled if the price does not meet the limit you stipulate.
• Example: If you have placed a limit order to purchase XYZ script at ₹3000, the order is processed only if and when the price of the stock drops to ₹3000 or even less.

3. Stop Loss Order

• A stop loss market order is an order which helps reduce the losses an investor would suffer. It automatically triggers the selling of a stock at a certain price point (stop price). Thus, it helps in risk management because a sale will be triggered in order to avoid further losses if the price goes down to the predetermined level. 
• Examples: If you buy XYZ at ₹1000 and place a stop-loss order at ₹950, your shares will be sold automatically if the price comes down to ₹950, hence limiting your loss.

4. After-Market Order

• An after-market order is an order placed when the stock market is closed. In India, the stock market is open from 9:15 a.m. to 3:30 p.m. So, after-market orders are for execution when the market opens the next day.  
• Example: If you place an after-market order to buy XYZ right at market closing time,  the same transaction will be processed when the market reopens the following trading day.

5. Cover Order

• A cover order is an intraday trading order comprising a market order and a compulsorily placed stop-loss market order. The first order is executed right at the same instance, while the second one is for  capping the placed losses.
• Example: You purchase XYZ at ₹200 with a cover order, then you would place a stop-loss at ₹195. If the price goes down to ₹195, it triggers the stop-loss order.hus, your shares are sold to book losses.

6. Good Till Cancelled (GTC) Order

• A GTC order remains valid until it is executed or cancelled. It is not limited to the closing of any trading day and can be valid for several days or weeks.
• Example: If you are placing a GTC order to buy XYZ at ₹1000, the order shall remain active until you get the order executed, or you wish to cancel the order.

7. Immediate or Cancelled (IOC) Order

• An IOC (Immediate or Cancel) order is executed immediately. If only part of the order is filled, the unmatched portion is instantly cancelled and will not carry over to the next trading session. 
• Example: On placing an IOC order to buy 5000 shares for XYZ and only 3500 shares are available, the order of the remaining 1500 shares will be cancelled.  

8. Trailing Stop Loss Order

• A trailing stop-loss order will maintain a fixed price difference below the stock price as the stock price continues to increase. It aids in locking up the gains since the stop-loss level remains a fixed price difference below the highest reached price as the order has been placed. 
• Eg. If you buy XYZ at ₹1000, and set a trailing stop-loss of ₹5, then as the stock advances, the stop price will continue to rise with it. However, if the stock would fall ₹5 from its peak, a sell order is triggered.

9. Bracket Order

• A bracket order is a complex order with a primary order (buy/sell), a target order, and a stop-loss order. This is an automated action.  Once it is placed, the three orders are preset at the same time with the intention of trade management. 

For instance, you can place a bracket order to buy XYZ at ₹100. Then, you can place a target order to sell at ₹105 and a stop-loss order at ₹95. The moment the primary order gets executed, the system on its own manages the target and stop-loss orders according to the settings placed by you.

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Difference Between Market Order and Limit Order

Here are the major differences between the market order and limit order listed in the below table.

Conclusion 
Understanding the different types of stock market orders allows traders to tailor their strategies effectively. Market orders ensure immediate execution at the best available price, while limit orders let you set a specific price, though there's no guarantee of execution. Stop-loss orders help manage risk by automatically selling a security when it reaches a set price. After-market orders enable trading outside regular hours. Advanced orders like cover, bracket, and trailing stop loss add strategic control and protection. Using the right order type helps investors make controlled trades, optimise execution, and align with their investment goals.