Understanding Order Types: How to Buy & Sell

When you are ready to make a move in the market, your broker’s app will ask you how you want to buy or sell. These are called Order Types. Choosing the right one helps you get the price you want and manage your risk.

---

1. Market Order (The “Right Now” Order)

A Market Order tells your broker: “I don’t care about the exact price; just buy/sell it for me at the best price available right now.”

• When to use it: When you want to enter or exit a stock immediately and the stock has high liquidity (lots of buyers and sellers).
• The Risk: In a fast-moving market, the price you actually get might be slightly higher or lower than the one you saw on your screen.

---

2. Limit Order (The “My Price” Order)

A Limit Order tells your broker: “Only buy this stock if the price hits ₹XXX or lower,” or “Only sell it if the price hits ₹YYY or higher.”

• When to use it: When you are patient and want to ensure you don’t pay more than your planned budget.
• The Risk: If the stock price never reaches your “Limit,” the order will not execute, and you might miss out on the trade.

---

3. Stop-Loss Order (The “Safety Net”)

This is the most important order for beginners. A Stop-Loss (SL) order is designed to limit your loss. It tells your broker: “If the price drops to this level, sell my shares immediately so I don’t lose more money.”

• Example: You buy a stock at ₹100. You set a Stop-Loss at ₹95. If the stock crashes, your broker sells it at ₹95, saving you from a bigger fall to ₹80 or ₹70.

---

4. GTT (Good Till Triggered)

Most modern brokers (like Dhan) offer GTT. Unlike regular orders that expire at the end of the day (3:30 PM), a GTT order stays active for up to a year.

• Use Case: If you want to buy a stock only if it falls 10% from its current price, you can set a GTT and forget about it. The broker will notify you when it’s triggered.

---

💡 Which one should you choose?

Situation	Recommended Order
I need to buy Nifty 50 stocks instantly	Market Order
I want to buy a stock only at a discount	Limit Order
I want to protect my capital from a crash	Stop-Loss Order
I want to buy a stock next month if it hits a price	GTT Order

---

⚠️ A Note on Market Hours

Orders placed between 9:15 AM and 3:30 PM are executed instantly. If you place an order at night or on a weekend, it is called an AMO (After Market Order) and will be sent to the exchange the next time it opens.

---

⚠️ Disclaimer: Wealth Kite is an educational resource. Understanding order types is essential for execution but does not guarantee success. Trading involves significant risk. Always test your understanding with small amounts before making large trades.