Order Types Complete Guide for India: Market, Limit, Stop-Loss, GTT, AMO Explained

The ₹18,000 Mistake: When a Market Order Went Wrong

November 15, 2024. 9:15 AM. Market just opened.

Paytm announces better-than-expected quarterly results. Stock at ₹390 in pre-open. Positive news. Retail trader (let's call him Raj) decides to buy.

Raj's order: Market order for 500 shares.

Expected price: ₹390
Actual execution: ₹404 average (filled at ₹398, ₹402, ₹406, ₹409 across 4 trades)

Immediate loss: (₹404 - ₹390) × 500 = ₹7,000 slippage

By 10 AM, stock settles at ₹392. Raj panics, sells at market.

Sell execution: ₹388 average (slippage on exit too)

Total loss: Entry slippage (₹7,000) + Exit slippage (₹2,000) + Price loss (₹6,000) = ₹18,000 in 45 minutes

All because he used the WRONG order type.

What Are Order Types? (The Basics)

An order type determines HOW your trade gets executed.

Think of it like ordering food:

• Market order: "Give me whatever you have right now" (instant, but price varies)
• Limit order: "I'll only buy if price is ₹500 or less" (control price, but may not get it)
• Stop-loss order: "Sell if price drops to ₹480" (protection from big losses)

Sounds simple. But using the wrong one can cost you 2-5% per trade in slippage alone.

Order Type #1: Market Order (Instant Execution, Price Uncertainty)

How It Works

A market order executes IMMEDIATELY at the best available price.

You don't specify a price. You just say "BUY NOW" or "SELL NOW."

The exchange matches you with the closest available order on the opposite side.

Execution Example

Scenario: You want to buy Reliance. Current price: ₹2,500.

Order book (sell side):

• ₹2,500.00 — 50 shares available
• ₹2,500.50 — 100 shares available
• ₹2,501.00 — 200 shares available

You place market order for 200 shares.

Execution:

• 50 shares at ₹2,500.00
• 100 shares at ₹2,500.50
• 50 shares at ₹2,501.00
• Average price: ₹2,500.58 (₹0.58 slippage per share = ₹116 total)

When to Use Market Orders

• ✅ Liquid stocks: Reliance, TCS, HDFC Bank, Infosys (tight bid-ask spreads)
• ✅ Need immediate entry/exit: Breakout trades, stop-loss exits, urgent liquidation
• ✅ Normal market hours: 9:30 AM - 3:15 PM when volume is high
• ✅ Small position sizes: 50-200 shares (won't move the market)

When to AVOID Market Orders

• ⛔ Illiquid stocks: Small-cap, low-volume stocks (5-10% slippage possible)
• ⛔ Market open (9:15-9:30 AM): Wild price swings, massive slippage
• ⛔ Market close (3:15-3:30 PM): Low liquidity, wide spreads
• ⛔ News events: Earnings, announcements (prices gap unpredictably)
• ⛔ Large orders: 500+ shares in mid-cap stocks (you'll move the price)

Order Type #2: Limit Order (Price Control, Fill Uncertainty)

How It Works

A limit order lets you specify MAXIMUM price you'll pay (buy) or MINIMUM price you'll accept (sell).

Your order ONLY executes if your price is available.

Execution Example

Scenario: TCS trading at ₹3,520. You want to buy but only at ₹3,500 or lower.

You place limit order: Buy TCS at ₹3,500 (limit price)

Outcome scenarios:

• If TCS drops to ₹3,500: Order fills at ₹3,500 ✅
• If TCS drops to ₹3,490: Order fills at ₹3,490 (better than limit) ✅
• If TCS stays at ₹3,520: Order never fills (missed opportunity) ⚠
• If TCS rallies to ₹3,600: Order never fills (missed the move) ⚠

Queue Priority

Limit orders are filled based on price-time priority:

• Price priority: Higher buy price (or lower sell price) gets filled first
• Time priority: Earlier orders at same price get filled first

Example: 5,000 people want to buy TCS at ₹3,500. Only 1,000 shares available at that price. First 1,000 orders (by time) get filled. Rest wait.

When to Use Limit Orders

• ✅ Illiquid stocks: Avoid slippage in low-volume stocks
• ✅ Large orders: 1,000+ shares (won't push price up)
• ✅ Swing trading entries: "I'll only buy if it drops to support level"
• ✅ Taking profit: "I'll only sell at my target price of ₹500"
• ✅ Market open/close: Protect against volatility

When to AVOID Limit Orders

• ⛔ Breakout trades: Stock already moving fast, may never hit your limit price
• ⛔ Stop-losses: NEVER use limit for stop-loss (order may not fill, unlimited loss)
• ⛔ Strong momentum: Stock gapping up, your limit price already left behind

Order Type #3: Stop-Loss Order (Protective Exit)

This is the MOST important order type for risk management. Also the most misunderstood.

There are TWO types of stop-loss orders in India:

SL-M (Stop-Loss Market)

How it works:

• You set a trigger price (e.g., ₹480)
• If stock hits ₹480, a MARKET order is placed
• Order gets filled immediately at best available price (may be ₹478, ₹479, ₹480)

Pros:

• GUARANTEED execution (you will exit)
• Protects from unlimited loss
• Simple to use

Cons:

• Slippage (may exit 1-2% below trigger price)
• Can be "stopped out" by temporary wicks/volatility

SL-L (Stop-Loss Limit)

How it works:

• You set TWO prices: Trigger price (₹480) & Limit price (₹478)
• If stock hits ₹480, a LIMIT order at ₹478 is placed
• Order only fills if price is ₹478 or better

Pros:

• Control over exit price (no slippage beyond limit)
• Can set tight range (trigger ₹480, limit ₹479)

Cons:

• DANGEROUS: Order may NEVER fill if price gaps down
• Stock crashes from ₹480 to ₹460 in seconds → your ₹478 limit never fills → unlimited loss

How to Place Stop-Loss Orders

Step 1: Buy your stock (e.g., 100 shares of Infosys at ₹1,500)

Step 2: Identify technical stop-loss level (e.g., below support at ₹1,470)

Step 3: Place SL-M order:

• Order type: SELL
• Product: NRML (or CNC for delivery)
• Order type: SL-M
• Trigger price: ₹1,470
• Quantity: 100

What happens: If Infosys hits ₹1,470, market sell order triggers. You exit at ~₹1,468-₹1,470 (₹30 loss per share = ₹3,000 total loss).

Order Type #4: Cover Order (Intraday with Mandatory SL)

What it is: A special intraday order that gives you extra leverage BUT forces you to set a stop-loss.

How It Works

• You buy/sell a stock with built-in stop-loss
• Broker provides 3-5x intraday leverage (varies by broker)
• Stop-loss is MANDATORY (can't trade without it)
• Must be squared off before 3:20 PM (intraday only)

Example

Regular intraday:

• Capital: ₹1,00,000
• Stock: Reliance at ₹2,500
• You can buy: 40 shares (₹1,00,000 ÷ ₹2,500)

Cover order:

• Capital: ₹1,00,000
• Leverage: 5x
• You can buy: 200 shares (5x leverage)
• BUT stop-loss is mandatory (e.g., at ₹2,480)

If target hits (₹2,530): Profit = 200 × ₹30 = ₹6,000 (6% gain)

If stop-loss hits (₹2,480): Loss = 200 × ₹20 = ₹4,000 (4% loss)

When to Use Cover Orders

• ✅ Intraday momentum trades (breakouts, trend following)
• ✅ You want leverage but also discipline (forced SL)
• ✅ Liquid stocks only (Nifty 50, liquid mid-caps)

When to AVOID Cover Orders

• ⛔ Delivery trades (cover order is intraday only)
• ⛔ Wide stop-losses (cover order requires tight SL)
• ⛔ Choppy markets (frequent SL hits)

Order Type #5: Bracket Order (Target + SL in One)

What it is: An advanced intraday order with BOTH target AND stop-loss set simultaneously.

How It Works

• You place one entry order
• Simultaneously set: (1) Target price, (2) Stop-loss price
• Whichever hits first executes, other order cancels automatically
• 3-5x leverage available
• Intraday only (must square off by 3:20 PM)

Example

Trade setup:

• Stock: TCS at ₹3,500
• Entry: ₹3,510 (buy above resistance)
• Target: ₹3,570 (₹60 profit)
• Stop-loss: ₹3,480 (₹30 risk)
• Quantity: 100 shares

Scenario 1: Target hits

• TCS reaches ₹3,570
• Sell order executes automatically
• Profit: 100 × ₹60 = ₹6,000
• Stop-loss order cancels automatically

Scenario 2: Stop-loss hits

• TCS drops to ₹3,480
• Stop-loss executes automatically
• Loss: 100 × ₹30 = ₹3,000
• Target order cancels automatically

Benefits of Bracket Orders

• ✅ Forces discipline (can't forget to set SL or target)
• ✅ Automation (no need to monitor constantly)
• ✅ Leverage (3-5x intraday buying power)
• ✅ Risk:Reward clearly defined upfront

Limitations

• ⛔ Intraday only (can't hold overnight)
• ⛔ Can't modify orders once placed
• ⛔ Tight SL required (can't set wide stops)
• ⛔ Not available on all brokers

Order Type #6: GTT (Good Till Triggered) — Zerodha Game-Changer

What it is: A Zerodha-specific feature that lets you set stop-loss or target orders for UP TO 1 YEAR.

This is HUGE because regular SL orders expire at 3:30 PM daily. GTT stays active for weeks/months.

How GTT Works

You set a trigger condition (e.g., "If Reliance hits ₹2,600, buy 100 shares").

GTT monitors the price. When condition is met, order is placed automatically.

Order remains active for 1 year (or until you cancel it).

GTT Order Types

1. GTT Single (Stop-loss or Target)

• Trigger: If price hits ₹X, place order
• Use case: Stop-loss for delivery holdings, breakout entry alerts

2. GTT OCO (One-Cancels-Other)

• Set BOTH target and stop-loss
• Whichever hits first, other cancels
• Use case: Swing trading positions with multi-day holds

Real Use Case: Swing Trading with GTT

Monday morning:

• Buy HDFC Bank at ₹1,650 (100 shares)
• Set GTT OCO:
• Target: ₹1,720 (₹70 profit per share)
• Stop-loss: ₹1,620 (₹30 risk per share)
• Valid for: 30 days

What happens:

• You don't need to watch the screen
• If HDFC hits ₹1,720 anytime in next 30 days → automatic sell, ₹7,000 profit
• If HDFC drops to ₹1,620 anytime → automatic sell, ₹3,000 loss
• Risk:Reward = 1:2.33 ✅

GTT Limitations

• Only available on Zerodha (other brokers don't have it yet)
• Charges: ₹20 per executed GTT order
• Not available for F&O (only equity)
• Trigger checked every few seconds (not tick-by-tick)

Order Type #7: AMO (After Market Order)

What it is: Place orders AFTER market closes (3:30 PM - 8:59 AM) for next day execution.

How AMO Works

• Market closes at 3:30 PM
• Between 3:30 PM - 8:59 AM, you can place AMO orders
• Orders get entered into exchange system at 9:00 AM next day
• At 9:15 AM (market open), orders are processed

Why Use AMO?

Queue priority advantage:

• AMO orders placed at 4:00 PM get processed at 9:00 AM
• These orders are FIRST in queue (before regular market hours orders)
• Important for breakout trades, IPO listings, gap-up openings

Real Example: Gap-Up Opening

Scenario: Infosys announces huge deal on Feb 5 evening (after market close).

Feb 5, 6:00 PM: You place AMO limit order to buy Infosys at ₹1,520 (currently ₹1,500)

Feb 6, 9:00 AM: Your order enters exchange (first in queue)

Feb 6, 9:15 AM: Market opens. Infosys opens at ₹1,540 (gap up).

Because your AMO was FIRST in queue, you got filled at ₹1,520-₹1,530. Others placing orders at 9:16 AM got filled at ₹1,545-₹1,550.

Queue advantage saved you ₹20-30 per share.

When to Use AMO

• ✅ After-hours news (results, policy changes)
• ✅ Gap-up/gap-down expected openings
• ✅ You can't place orders in morning (job, travel)
• ✅ Want to be first in queue for breakout levels

AMO Limitations

• Only limit orders allowed (no market orders in AMO)
• Orders sit overnight (can't modify once market closed)
• If gap is too large, your limit may not fill

Advanced Order Types

IOC (Immediate or Cancel)

How it works: Place order. If not filled immediately, cancel it.

Use case: Scalping, algo trading, testing liquidity at a price level.

Day Order vs GTC (Good Till Cancelled)

Day order: Expires at 3:30 PM if not filled (default in India)

GTC: Stays active for 30 days (NOT available in Indian exchanges — use GTT instead)

Iceberg Orders (Hide Large Quantities)

What it is: Place large order (e.g., 10,000 shares) but only show 500 shares in order book at a time.

Why: Prevent market from knowing you're a big buyer (price won't run away from you)

Availability: Only for institutional clients (not retail)

Real Scenarios: Which Order Type to Use

Scenario 1: Breakout Trade (Ascending Triangle)

Setup: Reliance forming ascending triangle. Resistance at ₹2,600 tested 4 times. Expecting breakout.

Order strategy:

• Place limit order at ₹2,610 (above resistance for confirmation)
• Stop-loss: SL-M at ₹2,560 (below triangle)
• Target: Manual exit or GTT at ₹2,740

Why limit, not market: If you use market order at breakout, slippage may fill you at ₹2,620-₹2,630 (worse R:R). Limit at ₹2,610 ensures better entry.

Scenario 2: Stop-Loss for Delivery Holdings

Setup: Bought HDFC Bank at ₹1,650 for swing trade. Technical support at ₹1,620.

Order strategy:

• If using Zerodha: GTT Single (SL-M) at ₹1,620 (set & forget for 30 days)
• If NOT using Zerodha: Daily SL-M order at ₹1,620 (reset every morning)

Scenario 3: Intraday Momentum Trade

Setup: Market opens strong. Nifty up 1.5%. Want to ride momentum in TCS.

Order strategy:

• Use bracket order: Entry ₹3,520, Target ₹3,560, SL ₹3,505
• Leverage: 3x (instead of buying 50 shares, buy 150 shares with leverage)
• Automatic exit at target or SL (no need to monitor)

Scenario 4: Illiquid Small-Cap Stock

Setup: Want to buy 500 shares of small-cap stock. Low daily volume. Wide bid-ask spread (₹125 bid, ₹132 ask).

Order strategy:

• NEVER use market order (may fill at ₹132, huge slippage)
• Use limit order at ₹127 (between bid-ask)
• Wait patiently for fills (may take hours, but saves ₹5/share = ₹2,500 total)

Scenario 5: Overnight News Expected

Setup: Union Budget tomorrow at 11 AM. Expecting infrastructure stocks to rally. Want to buy L&T.

Order strategy:

• Tonight (8 PM): Place AMO limit order at ₹3,550 (current price ₹3,520)
• Tomorrow 9:00 AM: Your order enters queue FIRST
• If L&T gaps up to ₹3,560: You get filled at ₹3,550 (queue priority)
• Others entering at 9:16 AM: Filled at ₹3,580+

Common Order Type Mistakes That Cost Money

Mistake #1: Using SL-L Instead of SL-M

Cost: Unlimited loss when stock gaps down and SL-L doesn't fill.

Solution: ALWAYS use SL-M for stop-losses. Accept 1-2% slippage as insurance cost.

Mistake #2: Market Orders at Market Open

Cost: 5-10% slippage in first 15 minutes due to volatility.

Solution: Use limit orders at open. Wait 15 minutes for prices to stabilize.

Mistake #3: Not Using GTT for Delivery Holdings

Cost: Forgetting to set daily SL → stock crashes 15% → catastrophic loss.

Solution: If you use Zerodha, use GTT for ALL delivery positions. No exceptions.

Mistake #4: Limit Orders for Fast-Moving Breakouts

Cost: Stock breaks out, your limit order never fills, miss 20% rally.

Solution: For strong breakouts, use market order (accept small slippage to get filled).

Mistake #5: Using Cover Orders for Wide Stops

Cost: Cover order requires tight SL. You set 5% SL. Order gets rejected.

Solution: Cover orders are for tight stops (1-2%). For wider stops, use regular intraday.

Order Types FAQ

The Final Word: Master Order Execution, Master Trading

Most traders spend 90% of their time learning strategy and 10% learning execution.

They should do the opposite.

A perfect strategy with poor execution = mediocre results.

An average strategy with perfect execution = consistently profitable.

Order types aren't glamorous. But they're the difference between:

• Getting filled at ₹500 vs ₹505 (1% slippage)
• Stop-loss executing at -2% vs -15% (disaster averted)
• Missing breakout vs catching it (opportunity captured)

Master order types. Master your edge.