Zerodha Order Types Explained

1. Market Order:

It is used when you want to buy or sell a stock instantly at the current market price.

• You only need to enter the quantity.
• No control over the price at which the order gets filled at the best available rate.
• Not allowed for stock options on Zerodha.

2. Limit Order:

A Limit Order allows you to specify the price at which you want to buy or sell a security.

• You need to enter the quantity and the limit price.
• The order will execute only at the specified price or a better price.
• There is no guarantee of execution if the market price does not reach your specified limit price.

Example (Buy Limit Order):
Suppose a stock is currently trading at ₹102, but you want to buy it only at ₹100. You can place a buy limit order at ₹100. The order will remain pending until the stock price falls to ₹100 or below. If the price never reaches ₹100, the order will not be executed.

Example (Sell Limit Order):
Suppose a stock is currently trading at ₹100, but you want to sell it only at ₹105. You can place a sell limit order at ₹105. The order will remain pending until the stock price rises to ₹105 or above. If the price never reaches ₹105, the order will not be executed.

A limit order gives you greater control over the execution price, but unlike a market order, execution is not guaranteed.

3. Stop-Loss (SL) Order

A Stop-Loss (SL) Order helps limit potential losses by automatically placing an order when a specified trigger price is reached.

• You need to enter the quantity, trigger price, and limit price.
• Once the trigger price is hit, a limit order is sent to the exchange.
• Commonly used to protect positions from adverse price movements.

Important:

• For a Buy SL Order, the trigger price must be lower than the limit price.
• For a Sell SL Order, the trigger price must be higher than the limit price.

Example (Sell Stop-Loss):
Suppose you bought a stock at ₹100 and want to limit your loss if the price falls. You can place a Sell SL Order with a trigger price of ₹95 and a limit price of ₹94.50. When the stock price reaches ₹95, a sell limit order at ₹94.50 is sent to the exchange.

Example (Buy Stop-Loss):
Suppose you have short-sold a stock at ₹100 and want to limit losses if the price rises. You can place a Buy SL Order with a trigger price of ₹105 and a limit price of ₹105.50. When the stock price reaches ₹105, a buy limit order at ₹105.50 is sent to the exchange.

4. Stop-Loss Market (SL-M) Order

A Stop-Loss Market (SL-M) Order works like a Stop-Loss Order, but instead of placing a limit order, it places a market order once the trigger price is reached.

• You only need to enter the quantity and trigger price.
• No execution price needs to be specified.
• Once triggered, the order is executed at the best available market price.
• Suitable when immediate execution is more important than a specific price.
• SL-M orders are not permitted for stock options on Zerodha.

Example:
Suppose you bought a stock at ₹100 and want to limit your downside risk. You place an SL-M order with a trigger price of ₹95. If the stock falls to ₹95, a market sell order is immediately sent to the exchange and executed at the best available market price.

One correction: the statement "For a Buy SL, the trigger price should be below the limit price" is technically correct, but readers often misunderstand it. The more important concept is:

• Buy SL Orders are usually placed above the current market price.
• Sell SL Orders are usually placed below the current market price.

5. Good Till Triggered (GTT) Order

A Good Till Triggered (GTT) Order allows you to place buy or sell orders that remain active for up to 365 days without requiring daily re-entry.

• You set a trigger price and the order is sent to the exchange only when the trigger condition is met.
• Useful for investors and traders who do not want to monitor the market continuously.
• GTT orders are available for CNC orders in the Equity Cash segment (NSE & BSE) and NRML orders in Equity Derivatives (NSE).
• GTT triggers remain valid for 365 days or until they are triggered, cancelled, or executed.
• If a GTT is triggered but the resulting order is not executed, you must place a new GTT order.
• Zerodha supports both Single Trigger and One Cancels the Other (OCO) GTT orders.
• OCO GTT allows users to set both a target price and a stop-loss trigger in a single order.
• A maximum of 250 active GTT orders can be placed at a time.

Example:
Suppose a stock is trading at ₹950 and you want to buy it only if it falls to ₹900. You can place a GTT buy order with a trigger price of ₹900. The order will remain active for up to 365 days and will be sent to the exchange only when the trigger price is reached.

6. Cover Order (CO)

A Cover Order (CO) is an intraday order type that combines a regular buy or sell order with a compulsory stop-loss order. It helps traders manage risk by automatically limiting potential losses if the market moves against their position.

• You can place a market order or limit order along with a mandatory stop-loss order.
• The stop-loss order is linked to the main order and cannot be cancelled independently.
• Cover Orders are available only for intraday trading.
• They are not available on the BSE or F&O segments.
• Positions must be squared off before the exchange's auto square-off timing.
• Cover Orders can only be exited from the order book.

How Cover Orders Work?

• For Buy Cover Orders: The stop-loss trigger price must be lower than the buy price.
• For Sell Cover Orders: The stop-loss trigger price must be higher than the sell price.

Example (Buy Cover Order):
Suppose a stock is trading at ₹100 and you expect the price to rise. You place a buy cover order at ₹100 with a stop-loss trigger at ₹95. If the stock price falls to ₹95, the stop-loss order is automatically triggered, helping limit your losses.

Example (Sell Cover Order):
Suppose you short-sell a stock at ₹100 and want to limit your risk. You place a sell cover order with a stop-loss trigger at ₹105. If the stock price rises to ₹105, the stop-loss order is triggered and the position is exited.

Important Points

• Cover Orders can only be used for intraday trades.
• The stop-loss order is mandatory and cannot be cancelled while the position remains open.
• If either leg of the cover order is rejected or cancelled, the position should be monitored and squared off immediately.
• Cover Orders are not available in the Futures & Options segment.

7. After Market Order (AMO)

An After Market Order (AMO) allows investors and traders to place buy or sell orders outside regular market hours. These orders are sent to the exchange when the market opens on the next trading day.

• AMOs are available for CNC, MIS, and NRML product types.
• AMOs are not available for Iceberg Orders and Cover Orders (CO).
• Regular orders placed after market hours are automatically treated as AMOs.
• AMOs are useful for traders who are unable to place orders during market hours or wish to place orders based on news and events occurring after market close.

AMO Timings

*MCX AMO timings vary based on daylight saving time schedules.

Example:
Suppose you want to buy shares based on a company's earnings announcement released after market hours. Instead of waiting for the market to open, you can place an AMO in advance, and it will be sent to the exchange when trading begins on the next trading day.

8. Regular Order

A Regular Order is any standard buy/sell order placed during market hours or pre/post-market sessions.

• You can choose between Market, Limit, or Stop-Loss order types.
• Used for most types of trades.

9. Basket Order

With Basket Orders, you can place multiple orders together at once.

• Useful for executing multiple trades quickly.
• You can create up to 20 baskets, and each basket can contain up to 20 orders.
• Available on both Kite Web and Kite Mobile.

How to Use Basket Orders

• Go to the Orders tab on Kite.
• Click on Baskets and then New Basket.
• Add stocks and order details.
• Click Execute to place all orders together.

10. Iceberg Order

An Iceberg Order allows traders to split a large order into multiple smaller orders (called legs) that are executed sequentially. This helps reduce market impact, improve execution efficiency, and conceal the actual order size from other market participants.

• Large orders are automatically divided into smaller legs.
• Each leg is sent to the exchange only after the previous leg is executed.
• Traders can choose the number of legs while placing the order.
• Supports only Limit Orders and Stop-Loss Limit (SL-L) Orders.
• A maximum of 50 legs can be created for a single Iceberg Order.
• Available for NSE Equity, NSE F&O (NFO), CDS, BSE Equity, and BSE F&O (BFO).
• Not available for MCX.
• Can be used for both intraday and overnight trades.

Example:
Suppose you want to buy 6,500 Nifty option contracts. Instead of placing one large order, you can split it into 5 legs of 1,300 contracts each. The first leg is sent to the exchange, and subsequent legs are placed automatically after the previous leg is executed.

Benefits of Iceberg Orders

• Helps reduce impact cost associated with large orders.
• Keeps the full order quantity hidden from the market.
• Allows traders to place orders exceeding exchange freeze limits.
• Eliminates the need to manually place multiple orders.

Important Points

• Each leg is treated as a separate order, and brokerage is charged accordingly.
• If any leg is cancelled, all pending legs are automatically cancelled.
• Market Orders and Stop-Loss Market (SL-M) Orders are not supported.
• Iceberg Orders are not available during pre-open and post-market sessions.
• Minimum order value requirements may apply depending on the segment.

Zerodha Validity Order Types

When placing an order, you also choose the validity period, which determines how long the order remains active.

1. Day Order

• Stays active until market close on the same trading day.
• If not executed, it is automatically cancelled.

2. IOC (Immediate or Cancel) Order

• Executes immediately.
• Any unfilled quantity is automatically cancelled.
• Useful for large or urgent trades.

Zerodha Order Placement

Zerodha allows order placement during pre-market, regular market, and after-market hours.

Notes

• Orders placed after market hours are automatically treated as AMO orders.
• Iceberg Orders and Cover Orders (CO) cannot be placed as AMO orders.
• Availability of Cover Orders may vary based on exchange or regulatory restrictions.

Zerodha Order Types Comparison

Example

Suppose a stock is currently trading at ₹100:

• Market Order: Buy immediately at the best available market price.
• Limit Order: Buy only if the price falls to ₹95.
• Stop-Loss Order: Sell if the price falls to ₹90 to limit losses.
• GTT Order: Place a buy order at ₹95 that remains active for up to 365 days.

Conclusion