Order Types Explained – Market, Limit, Stop Loss, GTT

Order Types Explained – Market, Limit, Stop Loss, GTT

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1. Market Order – For Instant Buying or Selling

A Market Order is used when you want to buy or sell a stock immediately at the best available current price.

Example: If a stock is trading at ₹100 and you place a market buy order, your order will execute instantly at or near ₹100 (depending on liquidity).

Best For:

• Fast entries and exits

• Liquid stocks (like Nifty50 or BankNifty stocks)

• Beginners who want quick execution

Risk: In volatile markets, the executed price may be different than expected due to slippage.

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2. Limit Order – For Price-Specific Trades

A Limit Order lets you set the exact price at which you want to buy or sell a stock.

Example: If a stock is at ₹100 but you want to buy only if it drops to ₹95, you place a buy limit order at ₹95. The trade will execute only when the stock hits that price.

Best For:

• Controlled entry or exit

• Reducing buying cost or maximizing selling price

• Avoiding market volatility

Risk: If the price never hits your limit, your order remains unexecuted.

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3. Stop Loss Order – For Managing Risk

A Stop Loss Order helps you limit your losses. You set a trigger price, and once the stock hits that price, your order gets activated.

There are two types:

• SL (Stop Loss) Limit: Order executes at your set limit price

• SL-M (Stop Loss Market): Order executes at market price after trigger

Example: If you buy a stock at ₹100 and want to limit loss to ₹95, you set a stop loss at ₹95. If the stock drops to ₹95, it sells automatically.

Best For:

• Risk management

• Intraday and swing trading

• Peace of mind

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4. GTT – Good Till Triggered (Zerodha Specific)

GTT is an order type offered by Zerodha that stays active until the trigger condition is met or for up to 1 year.

Example: You set a GTT buy trigger at ₹90 for a stock currently trading at ₹100. When the stock hits ₹90, your order is placed.

Best For:

• Long-term investors

• Those who don’t track the market daily

• Planning entry and exit in advance

Bonus Tip: It’s like a set-it-and-forget-it feature.

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Final Thoughts

Understanding these order types helps you trade smartly. Don’t just click “Buy” or “Sell”—know your options:

• Use Market for speed

• Use Limit for price control

• Use Stop Loss to protect capital

• Use GTT for automated, long-term planning