Chapter 2: Getting Started
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Day 12: Order Types — Market, Limit, Stop Loss
How you actually tell your broker what to buy and when
3 min read
📖 Haggling at the Market
Uncle Ray at the vegetable market: "How much for the potatoes?"
Vendor: "₹40/kg."
Uncle Ray: "I'll buy at ₹30/kg." (Limit order!)
Vendor: "Come back when stocks are high — I'll sell at ₹30 then." (Order pending...)
Uncle Ray: "Fine, just give me whatever price you've got right now." (Market order!)
Stock exchanges work exactly like this — but automatically, at millisecond speed, with millions of people haggling simultaneously. 🥔
Uncle Ray at the vegetable market: "How much for the potatoes?"
Vendor: "₹40/kg."
Uncle Ray: "I'll buy at ₹30/kg." (Limit order!)
Vendor: "Come back when stocks are high — I'll sell at ₹30 then." (Order pending...)
Uncle Ray: "Fine, just give me whatever price you've got right now." (Market order!)
Stock exchanges work exactly like this — but automatically, at millisecond speed, with millions of people haggling simultaneously. 🥔
Market Order — Just Get It Done
"Buy/sell immediately at whatever the current price is."
You don't specify a price. You say: "I want 10 shares of Reliance NOW."
✅ Pros: Guaranteed execution — you WILL get the shares
❌ Cons: You might pay slightly more (or get slightly less) than the displayed price — called slippage. In illiquid stocks, this can be significant.
You don't specify a price. You say: "I want 10 shares of Reliance NOW."
✅ Pros: Guaranteed execution — you WILL get the shares
❌ Cons: You might pay slightly more (or get slightly less) than the displayed price — called slippage. In illiquid stocks, this can be significant.
Limit Order — Your Price or Nothing
"Only buy/sell if the price hits MY specified level."
"I want 10 shares of Infosys — but only if the price reaches ₹1,400. Not a rupee more."
✅ Pros: Price control — you won't overpay
❌ Cons: Order might never execute — price may never reach your target
Most serious investors use limit orders. It keeps you disciplined.
"I want 10 shares of Infosys — but only if the price reaches ₹1,400. Not a rupee more."
✅ Pros: Price control — you won't overpay
❌ Cons: Order might never execute — price may never reach your target
Most serious investors use limit orders. It keeps you disciplined.
Stop Loss — Your Financial Seatbelt
⚠️ Stop Loss = The Most Important Order Type. Use It Always.
You bought Infosys at ₹1,500. You decide: "If it falls to ₹1,350, I'm out — I don't want to lose more than 10%."
You place a Stop Loss (SL) order at ₹1,350. If price touches ₹1,350 → automatic sell.
Without a stop loss = driving without a seatbelt. You might be fine. But one accident...
Rule: Every single trade must have a stop loss. No exceptions.
You bought Infosys at ₹1,500. You decide: "If it falls to ₹1,350, I'm out — I don't want to lose more than 10%."
You place a Stop Loss (SL) order at ₹1,350. If price touches ₹1,350 → automatic sell.
Without a stop loss = driving without a seatbelt. You might be fine. But one accident...
Rule: Every single trade must have a stop loss. No exceptions.
GTT — Good Till Triggered
GTT = "Wait for my price — no matter how long it takes."
Available on Zerodha and Groww. You set a trigger price and the order waits — days, weeks, months — until the price is hit.
"I want TCS at ₹3,200. Today it's ₹3,800. Set GTT at ₹3,200 and forget about it."
Three months later, market dips — TCS touches ₹3,200 — GTT triggers — you bought perfectly. No watching required!
Available on Zerodha and Groww. You set a trigger price and the order waits — days, weeks, months — until the price is hit.
"I want TCS at ₹3,200. Today it's ₹3,800. Set GTT at ₹3,200 and forget about it."
Three months later, market dips — TCS touches ₹3,200 — GTT triggers — you bought perfectly. No watching required!
| Order Type | When to Use | Risk |
|---|---|---|
| Market Order | Urgent buy/sell, liquid large-cap stocks | Slippage possible |
| Limit Order | You have a specific entry price in mind | May not execute |
| Stop Loss | Always — on every trade without exception | None — it protects you |
| GTT | Patient long-term accumulation | Market conditions may change |
🎯 Today's Takeaway:
Market order = instant execution, any price. Limit order = your price or nothing. Stop loss = mandatory every time. GTT = patient long-term buying. Tomorrow: Intraday vs Delivery — which should you do as a beginner?
Market order = instant execution, any price. Limit order = your price or nothing. Stop loss = mandatory every time. GTT = patient long-term buying. Tomorrow: Intraday vs Delivery — which should you do as a beginner?