Why is a nudge displayed saying that the order price is x% above or below the Last Traded Price (LTP)?

This nudge is displayed when a limit order is placed above the LTP for buy orders and below the LTP for sell orders. In these cases, the limit order is executed as a market order and is also called market protection order. This is because a limit order allows the clients to buy or sell an instrument at a specific price or a better price.

Example Scenario

The LTP of Axis Bank is ₹965.55. The best bid and offer are at ₹965.50 and ₹966.00, respectively.

Buy limit order

Buy limit orders are executed at the limit price or lower than the limit price. If the limit price for a buy order is higher than the LTP, the order will be executed as a market order since the LTP is lower than the limit price.

1. A buy limit order is placed at ₹970 when the LTP of Axis bank is ₹965.55.
2. The order gets executed at the market price since there is an offer to sell at ₹966, i.e., lower than the limit price of ₹970.
3. The client receives the stock for  ₹966 instead of ₹970, i.e., ₹4 less than what the client was willing to pay.
4. If the client still wants to buy the stock at ₹970, Stoploss (SL) or Good Till Triggered (GTT) orders can be used. To learn more about SL and GTT, see What are stoploss orders and how to use them? and What is the Good Till Triggered (GTT) feature?

Sell limit order

Sell limit orders are executed at the limit price or higher than the limit price. If the limit price for a sell order is lower than the LTP, the order will be executed as a market order since the LTP is higher than the limit price.

1. A sell limit order is placed at  ₹960 when the LTP of Axis bank is ₹965.55.
2. The order gets executed at the market price since there is an offer to buy at ₹965.50, i.e., higher than the limit price of ₹960.
3. The stock is sold for ₹965.50 instead of ₹960, i.e., ₹4.50 more than what the client was willing to sell for.
4. If the client still wants to sell the stock at ₹960, SL or GTT can be used.

Did you know? This nudge is displayed only when the limit price is greater than or less than the LTP by 2% for equity and futures and 5% for options.