Types of Orders on NSE: Market, Limit, Stop-Loss Explained

NSE (National Stock Exchange of India Limited) was established in 1992 and is India's largest financial market. It is one of the biggest stock exchanges globally and a major player in derivatives and equity trading volumes.

NSE has more than 2,700 listed companies, with a total market capitalisation of over ₹410.9 lakh crores. Market capitalisation, macroeconomic sectors, and trading series categorise the companies listed on NSE. You may have heard investors and traders refer to different NSE indices such as NIFTY 50, NIFTY Auto, and NIFTY Bank, etc.

If you want to start investing or trading on the NSE, it is important to understand the basics, starting with the different types of orders you can place.

Types of Orders on NSE

Every trader and investor should know about the different types of orders on the National Stock Exchange of India (NSE) to enhance trading efficiency, avoid significant losses and ensure the orders are executed at a specific price due to high volatility in the market.

Here are the different types of orders you can place on NSE.

Market Order

A market order on NSE is executed immediately at the best available current price. When an investor places a ‘Buy’ market order, it is sent to the stock exchange and matched with a corresponding investor’s ’ Sell ’ order to execute the order.

Market orders are usually executed immediately, as there is no specific price set, executing orders seamlessly and quickly. This type of order allows investors to buy a high-growth potential stock at the right time since market orders are executed promptly.

However, since investors have no control over the order execution price, they may end up paying a higher price (or receiving a lower price when selling) than expected during periods of high volatility.

Limit Order

A limit order allows investors and traders to buy or sell securities at a specific price or at a better price. It focuses on offering investors control over the order execution rather than offering speedy execution.

For example, ‘Buy’ orders are executed at the specific price or lower, whereas ‘Sell’ orders are executed at a specified price or higher.

A limit order will only be executed if the market price matches the investor's set price, offering better control over trades. These types of orders are especially beneficial during volatile markets or for illiquid stocks that experience dramatic and sudden price swings.

Stop Loss Order

A Stop-Loss (SL) order on NSE is an automated, risk management tool. In this order, a ‘Sell’ order is executed when the security falls to the specific price, called the ‘Trigger Price’. This helps reduce risk exposure and cap potential losses on a trade.

There are several types of Stop-Loss orders:

• Stop-Loss Market Order

When the price reaches the trigger price, the order is converted into a market order and is executed immediately at the current price.

• Stop-Loss Limit Order

When the security’s price hits the trigger price, the order becomes a limit order to ensure the trade is executed at the set price or at a better price.

• Fixed Stop-Loss Order

In this type, you set a fixed stop-loss order at a specific price, which automatically triggers a sale when hit.

• Trailing Stop-Loss Order

With a trailing stop-loss, the trigger price moves up with the stock price. If the stock drops, the stop remains locked at its highest peak minus the set percentage.

After Market Orders (AMO)

An After Market Order (AMO) allows traders and investors to place buy or sell equity orders from 3:45 PM to 8:57 AM and until 9:10 AM for Futures & Options (F&O). You can place after-market orders for the equity, F&O and currency segments.

There are two types of aftermarket orders:

• Limit After Market Order
• Market After Market Order

Traders and investors often place AMOs based on post-market hours news to take positions before the market opens. These orders can be modified or cancelled before they are sent to the exchange at 9:00 AM for execution.

Immediate or Cancel Orders

An immediate or cancel (IOC) order is a type of order where the system attempts to fully or partially execute the order immediately upon placement at the best available price. If the order cannot be fully or partially filled (executed), the entire order or the remaining unfilled portion is automatically cancelled.

FAQs

What are the main types of orders on the National Stock Exchange of India?

The main order types are market orders on NSE, such as market orders, limit orders, stop-loss orders, after-market orders and immediate or cancel orders.

What is a Market Order in NSE, and when should you use it?

A market order is executed immediately at the best price available in the market. Traders who prioritise execution speed over price opt for a market order.

What is a Limit Order, and how does it work on NSE?

A limit order allows traders or investors to set the exact price at which they want to buy or sell a security. If the markets hit your set price or a better price, your order will be executed.

What is a Stop-Loss Order in NSE trading?

A Stop-Loss Order triggers a buy or sell when a stock hits a price set by the trader, helping manage risk and reduce potential losses in volatile markets.

What is the difference between a Market Order and a Limit Order?

A market order offers speedy order execution, while a limit order focuses on price. Market orders may execute at current prices, whereas limit orders may not execute at all if the market doesn't reach the specific price.

What’s the difference between a Market Order and a Stop-Loss Order?

A market order executes immediately, while a stop-loss order only triggers when a specific price level is reached, acting as a risk management tool.

How does a Stop-Loss Order help reduce losses?

In a stop-loss order, the trader automatically exits a position when prices move unfavourably and hit a specific price.

Can a Stop-Loss Order fail to execute?

Yes, in highly volatile markets, the execution price may differ from the trigger price due to slippage.

Is a Market Order risky in volatile markets?

Yes, market orders can lead to unexpected prices during volatility because they execute at the current price instead of a fixed price.