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Different Types of Orders Available with Brokers

When it comes to trading in the stock market, having a good understanding of the different types of orders available is crucial. These orders allow investors to specify the conditions under which their trades will be executed, ensuring that they have control over their investments. One popular brokerage firm that offers a wide range of order types is Zerodha. Today we will explore some of the most common types of orders available with brokers like Zerodha.

DIfferent Types Of Market Order

Market Order

A market order is the simplest type of order and is used when you want to buy or sell a security at the best available price in the market. With a market order, your trade will be executed immediately, ensuring that you don’t miss out on any potential opportunities. However, it’s important to note that the execution price may not always be the same as the quoted price due to market fluctuations.

Limit Order

A limit order allows you to specify the maximum price at which you are willing to buy or the minimum price at which you are willing to sell a security. Unlike a market order, a limit order guarantees the execution price but not the execution itself. This means that your trade will only be executed if the market reaches your specified price.

Stop Loss Order

A stop loss order is designed to limit your losses in case the market moves against your position. With a stop loss order, you specify a trigger price, which, when reached, will automatically convert your order into a market order. This ensures that your trade is executed, but at a potentially different price than your trigger price. Stop loss orders are particularly useful for managing risk and protecting your investments.

Stop Loss Limit Order

Similar to a stop loss order, a stop loss limit order also helps manage risk. However, with a stop loss limit order, you have more control over the execution price. In addition to setting a trigger price, you also specify a limit price. If the trigger price is reached, your order becomes a limit order with the specified limit price. This allows you to have more control over the execution price while still protecting your investments.

A stop loss limit order is an advanced type of order used in trading that combines the features of a stop loss order and a limit order. With this order, investors can protect their investments by setting a trigger price at which the stock is sold and a limit price to ensure that the stock is not sold for less than a certain price. When the trigger price is reached, the stop loss limit order becomes a limit order with the specified limit price.

For example, if an investor holds a stock that they bought at Rs. 100 and wants to limit potential losses, they can place a stop loss limit order with a trigger price of Rs. 90 and a limit price of Rs. 85. If the stock’s price drops to Rs. 90, the stop loss limit order is triggered, and it becomes a limit order to sell the stock, but not for less than Rs. 85. To use a stop loss limit order for entry in Bank Nifty options, with just 0.10 points above the given level, you can follow these steps:

Determine the desired entry level

Choose the specific level at which you would like to enter the trade. Let’s say you decide on an entry level of 100 for Bank Nifty options.

Calculate the trigger price

Add 0.10 points to the chosen entry level to calculate the trigger price for your stop loss limit order. In this example, the trigger price would be 100 + 0.10 = 100.10.

Set the limit price

Decide on the limit price, which is the maximum price at which you are willing to execute the trade. This price should be slightly higher than the trigger price to increase the chances of execution. For instance, you might set a limit price of 105.

Place the stop loss limit order

Access your preferred trading platform provided by your broker, such as Zerodha or Upstox. Locate the option contract for Bank Nifty and select the stop loss limit order option.

Enter the details

Input the necessary details, including the symbol (Bank Nifty), order type (stop loss limit), trigger price (100.10), limit price (105), quantity (number of contracts), and any other required parameters or conditions.

Review and submit

Double-check all the order details to ensure accuracy. Once you are satisfied, submit the stop loss limit order for execution. Example: Let’s assume you want to enter a Bank Nifty options trade with an entry level of 35,000. You would place a stop loss limit order with a trigger price of 100.10 and a limit price of 35,000.20. This order will be executed if the Bank Nifty price reaches 100.10 or higher and will not be executed if the price falls below 105.

Bracket Order

A bracket order combines multiple types of orders into one comprehensive strategy. It consists of three components: the entry order, target order, and stop loss order. With a bracket order, you can set a profit target and a stop loss level simultaneously, ensuring that you have predefined exit points for your trades. This type of order is especially popular among traders who want to automate their trading strategies.

These are just a few examples of the different types of orders available with brokers like Zerodha or upstox or any other discount broker. Each order type serves a specific purpose and understanding them can greatly enhance your trading experience. Whether you are a beginner or an experienced trader, it is important to familiarize yourself with these order types and use them wisely to achieve your investment goals.

 

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