Market price protection in Alert Triggers Order (ATO) executes trades immediately at the best available price while protecting against extreme price fluctuations.
Market price protection converts your market order into a limit order if the price moves outside a set protection range. This prevents you from buying at unexpectedly high prices or selling at unexpectedly low prices.
How market price protection works
When you place an ATO with market price protection, the system:
- Calculates a protection range based on the current market price.
- Attempt to execute your order immediately within this range.
- Converts any unfilled quantity to a limit order at the protection price if the market moves outside the range.
The market protection percentage is calculated as per the table below:
| Security type | Price range (in ₹) | Percentage of the Last Traded Price (LTP) |
| EQ and FUT | Less than 100 | 2% |
| EQ and FUT | Between 100 and 500 | 1% |
| EQ and FUT | More than 500 | 0.5% |
| OPT | Less than 10 | 5% |
| OPT | Between 10 and 100 | 3% |
| OPT | Between 100 and 500 | 2% |
| OPT | More than 500 | 1% |
Example Scenario
Consider that a stock is currently trading at ₹90.
- Buy order: A client places a market price protection buy order for 100 shares.
- Protection range: The system establishes a protection range, i.e., 2% above the current price since the price is less than 100. As a result, the protection limit price is set at ₹91.80.
- Order execution: The order attempts to execute immediately, buying shares at ₹91.80 or below, ensuring the best available price within that limit.
- Limit order placed: If the order cannot be filled for 100 shares within this range, the remaining quantity will remain open as a limit order at ₹91.80.
Advantages of market price protection in ATO
-
Prevents price impact:
By capping the execution price, it ensures that the client does not pay more than a specified price for a buy order or receive less than a specified price for a sell order.
- Flexibility: Combines market orders with the price control of limit orders, giving clients more flexibility in managing trade executions.